Medical Facilities Corporation Announces First Quarter Results and 11.8% Dividend Increase

TORONTO, May 9, 2024 /CNW/ - Medical Facilities Corporation ("Medical Facilities," "MFC," or the "Corporation") (TSX: DR), reported its financial results today for the first quarter ended March 31, 2024. Medical Facilities also announced an 11.8% increase to its quarterly dividend. All amounts are expressed in U.S. dollars unless indicated otherwise.

Q1 2024 Highlights
(Compared to Q1 2023 and excluding the divested MFC Nueterra ambulatory surgery centers)

• Facility service revenue increased 4.5% to $108.3 million
• Surgical cases increased by 4.3%
• Income from operations increased 29.6% to $17.5 million
• EBITDA¹ increased 19.0% to $22.3 million
• Repaid $5.0 million on its corporate credit facility
• Returned an additional $1.8 million to shareholders through the purchase of 253,900 common shares under its normal course issuer bid ("NCIB")

"We had a solid first quarter with our surgical hospitals achieving higher revenues on increased surgical case volumes," said Jason Redman, President and CEO of Medical Facilities. "During the quarter, we utilized our cash flow to fortify our financial position by further reducing the amount owed on our corporate credit facility and continued to buy back shares under our NCIB program."

"We are also pleased to announce an 11.8% increase in our quarterly dividend. The increase reflects the sustained solid cash flow and operating performance of the business, and further demonstrates our commitment to delivering shareholder returns and enhancing shareholder value."

Financial Results	For the three months ended March 31
(thousands of U.S. dollars, except per share amounts and where otherwise noted)	2024		2023		% Change
Facility service revenue	108,258		109,250		(0.9 %)
Operating expenses	90,856		95,745		(5.1 %)
Income from operations	17,402		13,505		28.9 %
Finance costs (changes in values of derivative instruments and gain/loss on foreign currency)	7,277		551		1,220.7 %
Finance costs (net interest expense)	1,287		1,636		(21.3 %)
Income tax expense	377		1,652		(77.2 %)
Net income^2	8,461		9,666		(12.5 %)
Earnings per share
Basic	$0.07		$0.17		(58.8 %)
Diluted	$0.07		$0.17		(58.8 %)

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	For the three months ended March 31
(thousands of U.S. dollars, except where otherwise noted)	2024	2023	% Change
Net income	8,461	9,666	(12.5 %)
Income tax expense	377	1,652	(77.2 %)
Finance costs	8,564	2,187	291.6 %
Depreciation and amortization	4,874	5,640	(13.6 %)
EBITDA	22,276	19,145	16.4 %

Distributable Cash Flow	For the three months ended March 31
(thousands of dollars, except per share amounts and where otherwise noted)	2024	2023	% Change
Cash available for distribution^1 (C$)	8,777	5,583	57.2 %
Distributions (C$)	1,970	2,053	(4.0 %)
Distributions per common share (C$)	0.08	0.08	-
Payout ratio^1	22.4 %	36.9 %	(39.3 %)

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 3.11% on the March 28, 2024, closing price of C$10.35 per common share.

On March 31, 2024, MFC had consolidated net working capital of $7.8 million and cash and cash equivalents of $25.7 million compared to net working capital of $19.8 million and cash and cash equivalents of $24.1 million as at December 31, 2023. During the quarter, MFC made repayments of $5.0 million against the corporate credit facility and repurchased common shares under the NCIB for aggregate consideration of $1.8 million. The change in net working capital also reflects an increase in the obligation for purchase of common shares to $9.7 million, which was recognized under the automatic share purchase plan in relation to the NCIB as of March 31, 2024, including applicable buyback taxes. Subsequent to the period end, the Corporation purchased 93,500 of its common shares for a total consideration of $0.7 million under the automatic share purchase plan, through May 3, 2024.

MFC's financial statements and management's discussion and analysis, for the three-month period ended March 31, 2024, will be filed on SEDAR+ at www.sedarplus.ca on Thursday, May 9, 2024, and will also be available on Medical Facilities' website at www.medicalfacilitiescorp.ca.

Dividend Increase

The Board of Directors has approved an 11.8% increase to the Corporation's quarterly dividend to CAD$0.09 per common share commencing with the second quarter dividend payable to the shareholders of record at the close of business on June 28, 2024. The Corporation believes that the new dividend rate is sustainable given its operations and cash available for distribution.

Notice of Conference Call

Management of MFC will host a conference call today, May 9, 2024, at 8:30 am ET to discuss its first quarter financial results. All interested parties may join the conference call by dialing 1-800-836-8184 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/4aRToeZ to receive an instant automated call back.

A live audio webcast of the call will be available at https://bit.ly/MFC2024Q1. 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 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, 416.848.7380, [email protected]