Medical Facilities Corporation Announces Third Quarter 2022 Results

TORONTO, Nov. 10, 2022 /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, 2022. All amounts are expressed in U.S. dollars unless indicated otherwise.

Q3 2022 Highlights
(Compared to Q3 2021)

• Surgical case volumes increased 3.0%;
• Facility service revenue increased 6.0% to $102.2 million;
• Total revenue and other income increased 3.2% to $102.2 million;
• Income from operations decreased 37.0% to $10.4 million due to higher consolidated operating expenses, including increases in both clinical and non-clinical wages and salaries, higher drugs and supplies costs due to case mix, and increases in general and administrative expenses;
• EBITDA¹ was $15.6 million, a decrease of 33.1%;
• Impairment loss on loan receivable increased by $9.4 million, as a result of re-evaluating the impairment loss allowance reserved on the loan receivable from Unity Medical and Surgical Hospital ("UMASH"); and,
• During the nine months ended September 30, 2022, MFC purchased 1,393,900 of its common shares under its normal course issuer bid for a total consideration of $10.0 million.

"We continued to see steady surgical case volume growth, which contributed to our higher revenue for the quarter," said Jason Redman, President and CEO of Medical Facilities. "However, like others in our industry, our profitability was again impacted by inflationary pressures, including higher labour costs and other operating expenses."

"Since the start of last December, through the normal course issuer bid and the recently completed substantial issuer bid, MFC purchased approximately 4.8 million of its common shares. With our strong cash flow and balance sheet, we are in an excellent position to drive financial performance and unlock additional shareholder value."

Financial Results

Financial Results	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)	2022	% change	2021	2022	% change	2021
Facility service revenue	102,167	6.0 %	96,388	305,117	6.0 %	287,956
Government stimulus income	-	(100.0 %)	2,652	2,173	(70.5 %)	7,357
Total revenue and other income	102,167	3.2 %	99,040	307,290	4.1 %	295,313
Consolidated operating expenses	91,742	11.2 %	82,485	265,724	9.1 %	243,457
Income from operations	10,425	(37.0 %)	16,555	41,566	(19.8 %)	51,856
Finance costs (net interest expense)	1,310	(10.8 %)	1,468	4,063	(12.2 %)	4,625
Finance costs (changes in values of derivative instruments and gain/loss on foreign currency)	8,425	(40.9 %)	14,259	8,239	(56.0 %)	18,716
Impairment loss on loan receivable	9,394	100.0 %	-	13,384	100.0 %	-
Share of equity loss (income) in associates	5	200.0 %	(5)	271	97.8 %	137
Income tax expense (recovery)	(3,213)	(23.9 %)	(2,594)	(23)	(100.8 %)	2,788
Net income (loss)^2	(5,496)	(260.4 %)	3,427	15,632	(38.9 %)	25,590
Earnings (loss) per share
Basic	$(0.35)	(218.2 %)	$(0.11)	$(0.07)	(141.2 %)	$0.17
Diluted	$(0.35)	(218.2 %)	$(0.11)	$(0.07)	(141.2 %)	$0.17

Reconciliation of Net Income (Loss) to EBITDA	For the three months ended September 30			For the nine months ended September 30
(thousands of U.S. dollars, except where otherwise noted)	2022	% change	2021	2022	% change	2021
Net income (loss)	(5,496)	(260.4 %)	3,427	15,632	(38.9 %)	25,590
Income tax expense (recovery)	(3,213)	(23.9 %)	(2,594)	(23)	(100.8 %)	2,788
Share of equity loss (income) in associates	5	200.0 %	(5)	271	97.8 %	137
Finance costs	19,129	21.6 %	15,727	25,686	10.0 %	23,341
Depreciation and amortization	5,185	(23.6 %)	6,789	15,404	(24.2 %)	20,318
EBITDA	15,610	(33.1 %)	23,344	56,970	(21.1 %)	72,174

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)	2022	% change	2021	2022	% change	2021
Cash available for distribution^1 (C$)	3,846	(48.5 %)	7,467	17,791	(22.1 %)	22,837
Distributions (C$)	2,367	8.7 %	2,177	7,216	10.5 %	6,532
Distributions per common share (C$)	0.08	14.3 %	0.07	0.24	14.3 %	0.21
Payout ratio^1	61.5 %	110.6 %	29.2 %	40.6 %	42.0 %	28.6 %

Based on an assessment as at September 30, 2022, MFC recorded a further $9.4 million impairment loss on the loan receivable from UMASH. This was in addition to the impairment loss of $4.0 million recorded following an assessment as at March 31, 2022.

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 3.00% on the September 30, 2022, closing price of C$10.73 per common share.

On September 30, 2022, MFC had consolidated net working capital of $56.1 million, compared to $67.4 million on December 31, 2021.

MFC's financial statements and management's discussion and analysis, for the three-month and nine-month periods ended September 30, 2022, will be filed on SEDAR at www.sedar.com on Thursday, November 10, 2022, 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 10, 2022, at 8:30 am ET to discuss its third quarter financial results. All interested parties may join the conference call by dialing 647-794-4605 or 1-888-882-4478 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/MFC2022Q3. 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 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 (Loss) 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]