Medical Facilities Corporation Announces 2023 Second Quarter Results

TORONTO, Aug. 10, 2023 /CNW/ - Medical Facilities Corporation ("Medical Facilities," "MFC," or the "Corporation") (TSX: DR), reported its financial results today for the three-month and six-month periods ended June 30, 2023. The Corporation also announced that subsequent to quarter end, it sold its ownership interests in City Place Surgery Center, St. Luke's Surgery Center of Chesterfield, LLC ("St. Luke's"), and Miracle Hills Surgery Center, LLC for aggregate net proceeds of $2.3 million. The buyer of St. Luke's also assumed debt of $5.0 million and the Corporation was released from its pro-rata guarantee. All amounts are expressed in U.S. dollars unless indicated otherwise.

Q2 2023 Highlights
(Compared to Q2 2022)

• Facility service revenue increased 7.2% to $109.5 million;
• Surgical case volumes increased 1.0%, excluding the MFC Nueterra ambulatory surgery centers ("MFC Nueterra ASCs");
• Income from operations was $15.6 million, an increase of 8.3% when excluding non-controllable, non-cash corporate level charges related to share-based compensation plans;
• EBITDA¹ was $21.2 million, an increase of 9.2% when excluding non-controllable, non-cash corporate level charges related to share-based compensation plans; and,
• The Corporation purchased 316,100 of its common shares for a total consideration of $1.9 million under its normal course issuer bid ("NCIB").

"Our hospitals continued to perform well, contributing to a really solid quarter," said Jason Redman, President and CEO of Medical Facilities. "We used our strong operating cash flow to repay $9 million on our corporate credit facility and return an additional $1.9 million to shareholders through our NCIB. We also substantially completed our overhead cost reduction plan, having reduced corporate costs by an annual run rate of approximately $5 million. And subsequent to quarter end, we completed the divestitures of all but one of the MFC Nueterra ASCs and sold our non-controlling ownership interest in St. Luke's."

Financial Results	For the three months ended June 30			For the six months ended June 30
(thousands of U.S. dollars, except per share amounts and where otherwise noted)	2023	2022	% change	2023	2022	% change
Facility service revenue	109,488	102,162	7.2 %	218,738	202,950	7.8 %
Government stimulus income	-	363	(100.0 %)	-	2,173	(100.0 %)
Total revenue and other income	109,488	102,525	6.8 %	218,738	205,123	6.6 %
Consolidated operating expenses	93,936	86,064	9.1 %	189,681	173,982	9.0 %
Income from operations	15,552	16,461	(5.5 %)	29,057	31,141	(6.7 %)
Finance costs (net interest expense)	1,565	1,352	15.8 %	3,201	2,753	16.3 %
Finance costs (changes in values of derivative instruments and gain/loss on foreign currency)	3,756	(12,690)	129.6 %	4,307	(186)	2,415.6 %
Impairment loss on loan receivable	-	-	-	-	3,990	(100.0 %)
Share of equity loss in associates	-	272	(100.0 %)	-	266	(100.0 %)
Income tax expense	1,002	5,284	(81.0 %)	2,654	3,190	(16.8 %)
Net income^2	9,229	22,243	(58.5 %)	18,895	21,128	(10.6 %)
Earnings per share
Basic	$0.13	$0.54	(75.9 %)	$0.30	$0.27	11.1 %
Diluted	$0.13	$0.19	(31.6 %)	$0.30	$0.25	20.0 %

Net income fluctuates significantly between the periods, primarily due to variations in non-cash finance costs (change in the value of exchangeable interest liability) and income taxes; these charges are incurred at the corporate level rather than at the facility level.

Reconciliation of Net Income to EBITDA^1	For the three months ended June 30			For the six months ended June 30
(thousands of U.S. dollars, except where otherwise noted)	2023	2022	% change	2023	2022	% change
Net income	9,229	22,243	(58.5 %)	18,895	21,128	(10.6 %)
Income tax expense	1,002	5,284	(81.0 %)	2,654	3,190	(16.8 %)
Share of equity loss in associates	-	272	(100.0 %)	-	266	(100.0 %)
Finance costs (income)	5,321	(11,338)	146.9 %	7,508	6,557	14.5 %
Depreciation and amortization	5,673	5,082	11.6 %	11,313	10,219	10.7 %
EBITDA	21,225	21,543	(1.5 %)	40,370	41,360	(2.4 %)

Distributable Cash Flow	For the three months ended June 30			For the six months ended June 30
(thousands of dollars, except per share amounts and where otherwise noted)	2023	2022	% change	2023	2022	% change
Cash available for distribution^1 (C$)	6,582	8,398	(21.6 %)	12,170	13,889	(12.4 %)
Distributions (C$)	2,027	2,401	(15.6 %)	4,080	4,849	(15.9 %)
Distributions per common share (C$)	0.08	0.08	-	0.16	0.16	-
Payout ratio^1	30.8 %	28.8 %	6.9 %	33.5 %	35.0 %	(4.3 %)

During the quarter, MFC paid a quarterly cash dividend of C$0.0805 per common share (or C$0.322 per share on an annualized basis), which represented an annualized yield of 3.88% on the June 30, 2023, closing price of C$8.29 per common share.

On June 30, 2023, MFC had consolidated net working capital of $22.3 million, compared to $32.5 million on December 31, 2022, with the decrease partly reflecting repayments of $9.0 million against the corporate credit facility during the quarter.

MFC's financial statements and management's discussion and analysis, for the three-month and six-month periods ended June 30, 2023, will be filed on SEDAR at www.sedar.com on Thursday, August 10, 2023, and will also be available on Medical Facilities' website at www.medicalfacilitiescorp.ca.

Notice of Conference Call

Management of MFC will host a conference call today, August 10, 2023, at 8:30 am ET to discuss its second quarter financial results. All interested parties may join the conference call by dialing 416-764-8650 or 1-888-664-6383 approximately 15 minutes prior to the call to secure a line. To join the conference call without operator assistance, you may register and enter your phone number at https://emportal.ink/44Ihcis to receive an instant automated call back.

A live audio webcast of the call will be available at https://bit.ly/MFC2023Q2. Please connect at least 15 minutes prior to the call to allow time for any software download that may be required to join the webcast. The webcast will be archived on MFC's website following the call date.

About Medical Facilities

Medical Facilities, in partnership with physicians, owns a diverse portfolio of highly rated, high-quality surgical facilities in the United States. MFC's ownership includes controlling interest in four specialty surgical hospitals located in Arkansas, Oklahoma, and South Dakota, and an ambulatory surgery center ("ASC") located in California. In addition, through a partnership with NueHealth LLC, Medical Facilities owns a controlling interest in an ASC located in Michigan. 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 ASCs specialize in outpatient surgical procedures, with patient stays of less than 24 hours. 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, 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.
² Net Income is attributable to the owners of the Corporation and the non-controlling interest holders.

SOURCE Medical Facilities Corporation

David Watson, Chief Financial Officer, Medical Facilities Corporation, 1-877-402-7162, [email protected]; Trevor Heisler, Investor Relations, MBC Capital Markets Advisors, [phone], [email protected]