Medical Facilities Corporation Announces Third Quarter 2021 Results and Increase to Quarterly Dividend

TORONTO, Nov. 11, 2021 /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, 2021. Medical Facilities also announces a 15% increase to its quarterly dividend and the intention to initiate a Normal Course Issuer Bid ("NCIB") to purchase up to 5% of its common shares. All amounts are expressed in U.S. dollars unless indicated otherwise.

Q3 2021 Highlights
(For continuing operations¹ compared to Q3 2020)

• Total revenue and other income increased 0.2% to $99.0 million;
• Income from operations was $16.6 million and EBITDA² was $23.3 million, representing decreases of 5.8% and 4.9%, respectively;
• The decreases to income from operations and EBITDA were mainly due to higher share-based compensation plan costs resulting from the strong appreciation of the Corporation's common shares.

"While our case volumes have not fully returned to pre-pandemic levels, we are pleased with our solid financial results over the first nine months of 2021," said Robert O. Horrar, President and CEO of Medical Facilities. "Not only have we successfully weathered the pandemic to date, but we also continued to improve our financial flexibility, having reduced our debt significantly over the past two years. And, with our strong cash flow performance, we are pleased to announce a 15% increase to our quarterly dividend. This increase is consistent with our objective of paying a dividend that is both competitive and sustainable."

Financial Results

Financial Results from Continuing Operations	For the three months ended			For the nine months ended
	September 30			September 30
(thousands of U.S. dollars, except per share amounts and where otherwise noted)	2021	% change	2020	2021	% change	2020
Facility service revenue	96,388	0.1%	96,322	287,956	12.2%	256,743
Government stimulus income	2,652	6.5%	2,491	7,357	(68.9%)	23,636
Total revenue and other income	99,040	0.2%	98,813	295,313	5.3%	280,379
Consolidated operating expenses	82,485	1.5%	81,241	243,457	4.0%	234,186
Income from operations	16,555	(5.8%)	17,572	51,856	12.3%	46,193
Finance costs (net interest expense)	1,468	(33.8%)	2,216	4,625	1.3%	4,567
Finance costs (changes in values of derivative instruments and gain/loss on foreign currency)	14,259	586.8%	2,076	18,716	641.2%	2,525
Shares of equity loss (income) in	(5)	(100.7%)	672	137	(91.5%)	1,606
associates
Income tax expense (recovery)	(2,594)	(193.1%)	2,786	2,788	(51.0%)	5,689
Net income^3	3,427	(65.1%)	9,822	25,590	(19.5%)	31,806
Earnings (loss) per share
Basic	($0.11)	(210.0%)	$0.10	$0.17	(58.5%)	$0.41
Diluted	($0.11)	(210.0%)	$0.10	$0.17	(58.5%)	$0.41

Reconciliation of Net Income to EBITDA and Adjusted EBITDA^2	For the three months ended			For the nine months ended
	September 30			September 30
(thousands of U.S. dollars, except where otherwise noted)	2021	% change	2020	2021	% change	2020
Net income	3,427	(65.1%)	9,822	25,590	(19.5%)	31,806
Income tax expense (recovery)	(2,594)	(193.1%)	2,786	2,788	(51.0%)	5,689
Share of equity loss (income) in	(5)	(100.7%)	672	137	(91.5%)	1,606
associates
Finance costs	15,727	266.4%	4,292	23,341	229.1%	7,092
Depreciation and amortization	6,789	(2.7%)	6,978	20,318	(3.6%)	21,068
EBITDA	23,344	(4.9%)	24,550	72,174	7.3%	67,261
Transaction costs on sale of Unity Medical and Surgical Hospital	-	-	-	-	(100.0%)	450
Adjusted EBITDA	23,344	(4.9%)	24,550	72,174	6.6%	67,711

Distributable Cash Flow	For the three months ended			For the nine months ended
	September 30			September 30
(thousands of dollars, except per share amounts and where otherwise noted)	2021	% change	2020	2021	% change	2020
Cash available for distribution^2 (C$)	7,467	(41.3%)	12,719	22,837	(23.5%)	29,847
Distributions (C$)	2,177	-	2,177	6,532	-	6,532
Distributions per common share (C$)	$0.07	-	$0.07	$0.21	-	$0.21
Payout ratio^2	29.2%	70.8%	17.1%	28.6%	30.6%	21.9%

During the quarter, MFC paid a quarterly cash dividend of C$0.07 per common share (or C$0.28 per share on an annualized basis), which represented an annualized yield of 2.87% on the September 30, 2021 closing price of $9.74 per common share.

As at September 30, 2021, MFC had consolidated net working capital of $54.6 million, compared to $45.0 million on December 31, 2020.

MFC's financial statements and management's discussion and analysis, for the three-month and nine-month periods ended September 30, 2021, will be filed on SEDAR at www.sedar.com on Thursday, November 11, 2021, and will also be available on Medical Facilities' website at www.medicalfacilitiescorp.ca.

Dividend Increase

The Board of Directors has approved a 15% increase to the Corporation's quarterly dividend to CAD$0.0805 per common share commencing with the fourth quarter dividend payable to the shareholders of record at the close of business on December 31, 2021. The Corporation believes that the new dividend rate is sustainable given its operations and cash available for distribution.

Normal Course Issuer Bid

The Board of Directors has approved the Corporation implementing an NCIB, subject to the approval of the TSX. A Notice of Intention to make an NCIB will be filed with the TSX, which will contemplate that the Corporation may purchase up to 5% of its issued and outstanding common shares during the 12-month term of the NCIB and subject to the other requirements of the TSX.

Notice of Conference Call

Management of MFC will host a conference call today, November 11, 2021, at 8:30 am ET to discuss its third quarter financial results. All interested parties may join the conference call by dialing 647-792-1240 or 1-800-430-8332 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/MFC2021Q3. 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. In addition, through a partnership with NueHealth LLC, Medical Facilities owns a controlling interest in five ambulatory surgery centers located in Michigan, Missouri, Nebraska, Ohio, and Pennsylvania. MFC also owns non-controlling interests in a specialty surgical hospital in Indiana and an ASC in Missouri. 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 Continuing operations is defined as consolidated operations excluding Unity Medical and Surgical Hospital and RRI Mishawaka Hospital, LP, which were treated as discontinued operations in the financial results for the nine-month period ended September 30, 2020.

² 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.

³ 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, 416.848.7380 or 1.877.402.7162, [email protected]; Trevor Heisler, Investor Relations, NATIONAL Capital Markets, 416.848.1434, [email protected]

Related Links

http://www.medicalfc.com