Medical Facilities Corporation Reports 2016 Second Quarter Financial Results

TORONTO, Aug. 11, 2016 /CNW/ - Medical Facilities Corporation ("Medical Facilities" or the "Company") (TSX: DR), today reported its financial results for the three-month and six-month periods ended June 30, 2016.  All amounts are expressed in U.S. dollars unless indicated otherwise.

Second Quarter 2016 Summary

• Revenue from continuing operations of $76.7 million, up 4.2% as compared with $73.6 million in Q2 2015, due in large part to higher surgical case volume of 4.7% compared to the prior year.
• Income from operations from continuing operations of $13.8 million, down 13.9% as compared with $16.0 million in Q2 2015. While volumes and revenue were up over prior year, a shift in payor mix and increased expenses due to case type contributed to lower income and margins.
• Cash available for distribution¹ of Cdn$10.5 million, down 12.9% as compared with Cdn$12.1 million in Q2 2015.
• Paid monthly dividends of C$0.28 per share, representing an annualized dividend of C$1.13 per share. At quarter end, the company has paid 149 consecutive dividends since inception.
• Payout ratio¹ of 82.8% as compared with 72.8% in Q2 2015

Subsequent to Quarter-end

• On July 15, 2016, the Company announced that it entered into a letter of intent to acquire, in stages, an indirect 83% interest in Unity Medical and Surgical Hospital ("Unity") in Mishawaka, Indiana. An 84% indirect interest in the real estate in which Unity operates was also purchased for US$27.0 million in cash.

"In the second quarter of 2016 we continued to see solid growth in revenue as a result of higher case volume at our facilities," said Britt T. Reynolds, CEO of Medical Facilities. "This continued volume and revenue growth, especially when compared to that of other healthcare providers in the quarter, reinforces our positive feeling on the quality of our facilities and service offering. Our income however was impacted by a significant increase in Medicare cases, which contribute substantially less than private payors. We are gaining traction on controlling operating costs through initiatives such as improving supply chain efficiencies, flexing labour costs and revenue collection that will enable us to grow our margins."

"From our growth initiatives, our entering into a letter of intent with Unity is an important step in our strategy to add facilities that complement our existing hospital portfolio," added Mr. Reynolds. This potential acquisition diversifies our geographic coverage and increases the diversity of our revenue and services mix across the entire platform. We are in the final stages of completing a definitive agreement this month, and will continue to look for similar strong assets with value creation potential."

^1Cash 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.

Financial Results		For the three months ended			For the six months ended
		June 30			June 30
(thousands of U.S. dollars, except per share amounts and where otherwise noted)		2016	% change	2015	2016	% change	2015
Revenue from continuing operations		76,728	4.2	73,636	152,673	4.7	145,881
Consolidated operating expenses		62,963	9.2	57,655	124,084	9.1	113,716
Income from operations		13,765	(13.9)	15,981	28,589	(11.1)	32,165
	Finance Costs (Net interest expense)	2,720	(5.9)	2,890	6,046	(5.3)	6,387
	Finance Costs (Changes in values of derivative instruments and gain/loss on foreign currency)	15,406	348.6	(6,197)	29,037	244.6	(20,083)
	Income tax expenses (recovery)	(4,986)	(273.0)	2,882	(7,849)	(167.6)	11,605
Consolidated income from operations		625	(96.2)	16,406	1,355	(96.0)	34,256
Attributable to:
	Owners of the Corporation	(5,718)		9,279	(11,523)		20,012
	Non-controlling interest	6,343		7,127	12,878		14,244
Earnings per share
	Basic	(0.18)		0.30	(0.37)		0.64
	Diluted	(0.18)		0.20	(0.37)		0.24
Cash available for distribution(C$)		10,544	(12.8)	12,105	22,447	(4.2)	23,432
Distributions (C$)		8,732	(0.9)	8,815	17,465	(0.9)	17,626
Cash available for distributionper common share (C$)		0.34	(11.9)	0.39	0.72	(3.7)	0.75
Distributions per common share (C$)		0.28		0.28	0.56		0.56
Payout Ratio		82.8%		72.8%	77.8%		75.1%

As at June 30, 2016, the Company had consolidated net working capital of $84.8 million, including cash and cash equivalents and short-term investments of $69.4 million and accounts receivable of $40.5 million, compared with net working capital of $85.7 million, including cash and cash equivalents and short-term investments of $70.9 million, and accounts receivable of $48.8 million, as at December 31, 2015. Long-term debt at the Centers' level, including the current portion, was $39.3 million as at June 30, 2016 compared with $35.4 million as at December 31, 2015.

Medical Facilities' complete second quarter 2016 financial statements and management's discussion and analysis will be issued and filed on SEDAR at www.sedar.com on Thursday, August 11, 2016 and will be available on the same day on Medical Facilities' website at www.medicalfacilitiescorp.ca.

Subsequent Event

On July 15, 2016, the Corporation purchased an 84% indirect interest in the real estate on which Unity Medical and Surgical Hospital ("Unity") is situated, for a cash purchase of US$27.0 million, through a limited partnership in which the Company has an indirect 84% limited partnership interest. Unity is a physician-owned medical and surgical hospital located in Mishawaka, Indiana. On July 15, 2016, the Corporation announced that it entered into a letter of intent to acquire, in stages, an indirect 83% interest in Unity.

Normal Course Issuer Bid ("NCIB")

The Company repurchases its common shares in the open market. 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. During the six-month period ended June 30, 2016, the Company purchased 67,500 of its common shares at an average price of Cdn$13.55 per share, for a total consideration of Cdn$0.9 million. The Company did not purchase any of its common shares during the three-month period ended June 30, 2016.

As at June 30, 2016, the Company had 31,045,945 common shares outstanding.

Notice of Conference Call

Management of Medical Facilities will host a conference call today, Thursday, August 11, 2016 at 8:30 am ET to discuss its second quarter 2016 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, August 18, 2016 by calling 416.849.0833 or 1.855.859.2056, reference number 50257359. A live audio webcast of the call will be available at http://bit.ly/29QWLIY.

To view Medical Facilities Q2 2016 financial statements and notes, please click here: http://files.newswire.ca/476/MFC_FS_IFRSQ216.pdf

About Medical Facilities

Medical Facilities owns controlling interests in four specialty surgical hospitals located in Arkansas, Oklahoma and South Dakota, as well as an ambulatory surgery center in California. The specialty hospitals perform scheduled surgical, imaging, diagnostic and other procedures, including urgent and primary 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. In addition, Medical Facilities owns a controlling interest in a diversified healthcare service company located in Oklahoma City that provides third-party business solutions to healthcare entities such as physician practices, facilities, and insurance companies. Medical Facilities is structured so that a majority of its 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.

SOURCE Medical Facilities Corporation

PDF available at: http://stream1.newswire.ca/media/2016/08/11/20160811_C7126_PDF_EN_751187.pdf

please contact: Michael Salter, Chief Financial Officer, Medical Facilities Corporation, 416.848.7380 or 1.877.402.7162, [email protected]; Craig MacPhail, Investor Relations, NATIONAL Equicom, 416.586.1938, [email protected]