TORONTO, March 21, 2013 /CNW/ - Medical Facilities Corporation ("Medical Facilities" or the "Company") (TSX: DR), today reported its financial results for the three-month and twelve-month periods ended December 31, 2012. All amounts are expressed in U.S. dollars unless indicated otherwise.
Full-year 2012 Highlights
- Revenue of $239.4 million, up 10.6% as compared with $216.4 million in 2011
- Income from operations of $78.7 million, up 4.2% as compared with $75.5 million in 2011
- Cash available for distribution1 of Cdn$37.8 million, up 11.8% from Cdn$33.8 million in 2011
- Payout ratio of 83.3%, as compared with 92.4% in 2011
- Increased dividends to an annualized rate of Cdn$1.125, payable monthly, effective with September 2012 payment
- Completed the acquisition of an indirect 51% interest in Arkansas Surgical Hospital effective November 30, 2012
- Completed a Cdn$41.8 million 5.9% convertible unsecured subordinated debenture offering
Fourth Quarter 2012 Highlights
- Revenue of $71.9 million, up 16.4% as compared with $61.7 million in Q4 2011
- Income from operations of $23.2 million, up 1.3% as compared with $22.9 million in Q4 2011
- Cash available for distribution of Cdn$10.7 million, up 10.7% as compared with Cdn$9.6 million in Q4 2011
- Payout ratio of 74.7%, as compared with 80.9% in Q4 2011
"We are pleased to report another strong year for Medical Facilities," stated Dr. Donald Schellpfeffer, CEO of Medical Facilities. "In a year in which we increased the monthly dividend, our payout ratio improved to 83.3%, from 92.4% in 2011. This significant improvement in payout ratio was the result of a 10.6% growth in revenue at our Centers and a 4.2% growth in income from operations, reflecting strong performance across our four specialty surgical hospitals and the addition of Arkansas Surgical Hospital in December 2012. Our initiatives in urgent and primary care have begun to contribute to surgical and imaging cases; however, the start-up costs of these initiatives have had a moderating influence on income from operations. While we expect the start-up phase to continue for a while longer, we are pleased with early results of the urgent and primary care initiatives. Medical Facilities also completed the issuance of Cdn$41.8-million 5.9% convertible debentures, which help position us for further growth," concluded Dr. Schellpfeffer.
Financial Results
Three months ended December 31, 2012
The Company generated cash available for distribution1 ("CAFD") of Cdn$10.7 million, or Cdn$0.376 per common share, and declared dividends of Cdn$8.0 million, or Cdn$0.281 per common share, resulting in a payout ratio of 74.7% for the quarter compared with 80.9% for the same period last year. This represents a Cdn$1.0 million increase in CAFD due to a stronger operating performance of the Centers, lower provision for current taxes, and foreign currency gains, partially offset by higher maintenance capital expenditures and corporate expenses.
1 Cash available for distribution is a non-International Financial Reporting Standards measure and is not intended to be representative of cash flow or results of operations determined in accordance with International Financial Reporting Standards. Accordingly, Medical Facilities provides a reconciliation of cash available for distribution to reported cash flow from operations in the Corporation's Management's Discussion and Analysis. Investors are cautioned that cash available for distribution, as calculated by Medical Facilities, is unlikely to be comparable to similar measures used by other issuers.
Consolidated facility service revenue ("revenue") was $71.9 million, an increase of 16.4% from revenue of $61.7 million for the fourth quarter of 2011. Approximately $4.4 million of the increase was due to the one-month contribution to revenue by Arkansas Surgical Hospital ("ASH"). All but one of the Company's Centers recorded higher revenue compared to the same quarter last year due to overall increases in surgical cases and pain management procedures and additional revenue from urgent and primary care initiatives.
Income from operations increased by 1.3% to $23.2 million, or 32.3% of revenue, from $22.9 million, or 37.1% of revenue, a year ago. As a percentage of revenue, income from operations declined due to overall increases in operating expenses attributable to higher case volumes, shifts in case mix and urgent and primary care initiatives. Historically ASH has had substantially lower operating margins than the Company's other Centers, which is expected to lower the Company's overall operating margins but still increase CAFD. Corporate expenses increased during the quarter as a result of expenses related to the acquisition of ASH and the issuance of 5.9% convertible debentures.
Net income was $39.9 million, or $1.097 per share (basic) and $0.794 per share (fully diluted) attributable to shareholders of the Company, compared with net income of $9.5 million, or earnings of $0.033 per share (basic and fully diluted), for the same quarter last year. The increase in net income was primarily attributable to (i) the changes in values of exchangeable interest liability and convertible debentures, which decreased in value by $6.7 million in aggregate during the quarter (resulting in an increase in reported net income) compared with an increase in value by $14.7 million in aggregate during the same quarter last year (resulting in a decrease in reported net income) and (ii) a tax recovery of $18.6 million compared with $5.3 million for the same quarter in 2011.
Twelve months ended December 31, 2012
The Company generated CAFD of Cdn$37.8 million, or Cdn$1.333 per common share, and declared dividends of Cdn$31.5 million, or Cdn$1.110 per common share, resulting in a payout ratio of 83.3%. The 910 basis-point improvement in payout ratio from 92.4% in 2011 was largely attributable to a stronger operating performance of the Centers and foreign currency gains, partially offset by higher maintenance capital expenditures and corporate expenses.
Revenue was $239.4 million, an increase of 10.6% from $216.4 million in 2011, which was due to a strong year-over-year growth across all but one Center attributable to an increase in cases generating higher per case revenue and an increase in surgical cases, which were partially offset by a decrease in pain management procedures and a less favourable payor mix.
Operating expenses also increased at most Centers primarily due to increases in case volumes, shifts in case mix and urgent and primary care initiatives. Expenses at the corporate level were higher due to costs related to the acquisition of ASH and issuance of 5.9% convertible debentures and annual salaries and benefits increases.
Income from operations was $78.7 million, or 32.9% of revenue, a 4.2% increase from income from operations of $75.5 million, or 34.9% of revenue, in 2011 as overall increases in operating expenses partially offset revenue growth.
Net income was $62.2 million, or $1.158 per share (basic and fully diluted) attributable to shareholders of the Company, compared with net income of $12.1 million, or a net loss of $0.542 per share (basic and fully diluted) in 2011. The 412.3% increase in net income was primarily due to improved operating performance of the Centers, lower interest expense, foreign currency gains, and income tax recovery, partially offset by a higher aggregate increase in the values of exchangeable interest liability and convertible debentures.
As at December 31, 2012, the Company had consolidated net working capital (excluding 7.5% convertible debentures classified as current liabilities) of $62.0 million, including cash and cash equivalents and short-term and long-term bank deposits of $46.7 million and patient accounts receivable of $46.9 million, compared with net working capital of $50.2 million, including cash and cash equivalents and short-term and long-term bank deposits of $29.5 million and patient accounts receivable of $41.5 million, as at December 31, 2011. Long-term debt at the Centers' level, including the current portion, was $41.6 million as at December 31, 2012, compared with $44.0 million as at December 31, 2011.
On December 21, 2012, the Company issued Cdn$41.8 million in aggregate principal amount of 5.9% convertible debentures, with interest paid semi-annually in arrears and maturity date of December 31, 2019.
As at December 31, 2012, the Company had 28,314,716 common shares outstanding.
Normal Course Issuer Bid
Under the normal course issuer bid ("NCIB") that commenced on May 15, 2012, the Company purchased 47,216 of its common shares during the fourth quarter at an average cost of Cdn$13.70 per share. For the full year, 81,774 of the Company's common shares were repurchased at an average cost of Cdn$13.65 per share for a total consideration of Cdn$1.1 million. Subsequent to year-end and up to and including March 20, 2013, the Company purchased another 7,600 of its common shares at an average cost of Cdn$14.25 per share.
All common shares purchased under the NCIB are cancelled. By repurchasing and cancelling its common shares, Medical Facilities reduces the total amount of dividends payable, resulting in cash savings for the Company. The remaining shareholders also benefit from the NCIB as the distributable cash per share increases.
Medical Facilities' complete 2012 fourth quarter and year-end financial statements and Management's Discussion and Analysis will be issued and filed on SEDAR on Thursday, March 21, 2013 and will be available on Medical Facilities' website at www.medicalfacilitiescorp.ca.
Notice of Conference Call
Management of Medical Facilities will host a conference call today, Thursday, March 21, 2013 at 10:00 am (ET) to discuss the Company's 2012 fourth quarter and year-end financial results. You can join the call by dialing 647-427-7450 or 1-888-231-8191. A taped replay of the conference call will be available until Thursday, March 28, 2013 at midnight by calling 416-849-0833 or 1-855-859-2056, reference number 17956496.
To view Medical Facilities Q4 and Year-end 2012 financial statements and notes, please click here: http://files.newswire.ca/940/MFC_Q4.PDF
About Medical Facilities
Medical Facilities owns controlling interests in five specialty surgical hospitals, located in South Dakota, Oklahoma and Arkansas, as well as an ambulatory surgery center in California. The specialty 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 ambulatory surgery center specializes in outpatient surgical procedures, with patient stays of less than 24 hours. Medical Facilities is structured so that a majority of its available free cash flow from operations is distributed to the holders of its common shares in the form of dividends. 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.
PDF available at: http://stream1.newswire.ca/media/2013/03/21/20130321_C6927_DOC_EN_24694.pdf
SOURCE: Medical Facilities Corporation
Michael Salter
Chief Financial Officer
Medical Facilities Corporation
(416) 848-7380 or 1-877-402-7162
[email protected]
Salvador Diaz
Investor Relations
TMX Equicom
(416) 815-0700 or 1-800-385-5451 ext. 242
[email protected]
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