Medical Facilities Corporation Announces 2023 Third Quarter Results

TORONTO, Nov. 9, 2023 /CNW/ - Medical Facilities Corporation ("Medical Facilities," "MFC," or the "Corporation") (TSX: DR), reported its financial results today for the three-month and nine-month periods ended September 30, 2023. All amounts are expressed in U.S. dollars unless indicated otherwise.

Q3 2023 Highlights
(Compared to Q3 2022)

• Completed the divestitures of its remaining ownership interests in the MFC Nueterra ambulatory surgery centers ("ASCs") for aggregate proceeds of $3.5 million;
• Facility service revenue was $104.6 million, representing an increase of 7.4% when excluding the MFC Nueterra ASCs;
• Income from operations increased 20.3% to $12.5 million;
• EBITDA¹ increased 13.7% to $17.7 million; and
• The Corporation repaid $3.0 million on its corporate credit facility and returned an additional $1.0 million to shareholders through the purchase of 157,700 of its common shares under its normal course issuer bid ("NCIB").

"This was another quarter of solid financial performance for MFC. We achieved higher revenue and profitability, achieved further savings at the corporate level, and successfully completed the divestitures of the MFC Nueterra ASCs," said Jason Redman, President and CEO of Medical Facilities. "Excluding the divested MFC Nueterra ASCs, our revenue for the quarter was up 7.4%. The divestiture of non-core assets not only strengthens our financial position but also allows MFC to better concentrate on supporting our physician partners in providing the best patient experience and hospital care."

"During the quarter, we also continued to reduce our corporate debt and repurchase shares as we remain focused on maintaining a strong and sustainable financial structure and creating long-term value for our shareholders."

Financial Results	For the three months ended September 30			For the nine months ended September 30
(thousands of U.S. dollars, except per share amounts and where otherwise noted)	2023	2022	% change	2023	2022	% change
Facility service revenue	104,579	102,167	2.4 %	323,317	305,117	6.0 %
Government stimulus income	-	-	-	-	2,173	(100.0 %)
Total revenue and other income	104,579	102,167	2.4 %	323,317	307,290	5.2 %
Consolidated operating expenses	92,037	91,742	0.3 %	281,718	265,724	6.0 %
Income from operations	12,542	10,425	20.3 %	41,599	41,566	0.1 %
Finance costs (changes in values of derivative instruments and gain/loss on foreign currency)	4,971	8,425	(41.0 %)	9,278	8,239	12.6 %
Finance costs (net interest expense)	1,450	1,310	10.7 %	4,651	4,063	14.5 %
Impairment loss on loans receivable	786	9,394	(91.6 %)	786	13,384	(94.1 %)
Non-operating losses (gains)	(2,167)	5	(43,440.0 %)	(2,167)	271	(899.6 %)
Income tax expense (recovery)	2,709	(3,213)	184.3 %	5,363	(23)	23,417.4 %
Net income (loss)^2	4,793	(5,496)	187.2 %	23,688	15,632	51.5 %
Earnings (loss) per share
Basic	($0.01)	($0.35)	97.1 %	$0.30	($0.07)	528.6 %
Diluted	($0.01)	($0.35)	97.1 %	$0.30	($0.07)	528.6 %

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 (Loss) to EBITDA^1	For the three months ended September 30			For the nine months ended September 30
(thousands of U.S. dollars, except where otherwise noted)	2023	2022	% change	2023	2022	% change
Net income (loss)	4,793	(5,496)	187.2 %	23,688	15,632	51.5 %
Income tax expense (recovery)	2,709	(3,213)	184.3 %	5,363	(23)	23,417.4 %
Non-operating losses (gains)	(2,167)	5	(43,440.0 %)	(2,167)	271	(899.6 %)
Finance costs	7,207	19,129	(62.3 %)	14,715	25,686	(42.7 %)
Depreciation and amortization	5,200	5,185	0.3 %	16,513	15,404	7.2 %
EBITDA	17,742	15,610	13.7 %	58,112	56,970	2.0 %

Distributable Cash Flow	For the three months ended September 30			For the nine months ended September 30
(thousands of dollars, except per share amounts and where otherwise noted)	2023	2022	% change	2023	2022	% change
Cash available for distribution^1 (C$)	5,429	3,846	41.2 %	17,596	17,791	(1.1 %)
Distributions (C$)	2,014	2,367	(14.9 %)	6,094	7,216	(15.5 %)
Distributions per common share (C$)	0.08	0.08	-	0.24	0.24	-
Payout ratio^1	36.9 %	61.5 %	(40.0 %)	34.6 %	40.6 %	(14.8 %)

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 3.40% on the September 29, 2023, closing price of C$9.46 per common share.

On September 30, 2023, MFC had consolidated net working capital of $13.1 million and cash and cash equivalents of $27.0 million compared to net working capital of $32.5 million and cash and cash equivalents of $34.9 million as at December 31, 2022. The decline in cash and cash equivalents partly reflects activity at the corporate level to make repayments of $12.0 million against the corporate credit facility and repurchasing common shares under the NCIB for aggregate consideration of $5.5 million.

MFC's financial statements and management's discussion and analysis, for the three-month and nine-month periods ended September 30, 2023, will be filed on SEDAR+ at www.sedarplus.ca on Thursday, November 9, 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, November 9, 2023, at 8:30 am ET to discuss its third quarter financial results. All interested parties may join the conference call by dialing 1-877-550-1875 approximately 15 minutes prior to the call to secure a line.

A live audio webcast of the call will be available at https://bit.ly/MFC2023Q3. Please connect at least 15 minutes prior to the conference call to ensure adequate 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. 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 ASC specializes 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.sedarplus.ca.

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]