Medical Facilities Corporation Reports 2016 Third Quarter Financial Results

TORONTO, Nov. 10, 2016 /CNW/ - Medical Facilities Corporation ("Medical Facilities," "MFC," or the "Company") (TSX: DR), today reported its financial results for the three-month and nine-month periods ended September 30, 2016. All amounts are expressed in U.S. dollars unless indicated otherwise.

"In the third quarter of 2016 we achieved some important milestones in growing the Company," said Britt T. Reynolds, CEO of Medical Facilities. "This included the first addition to our executive management team and finalizing some strategic acquisitions that will add to operations in the fourth quarter. We expect continued progress through the rest of the year."

Third Quarter 2016 Summary

• Revenue from continuing operations of $78.8 million, up 7.8% as compared with $73.1 million in Q3 2015, due in large part to higher surgical case volume up 4.6% compared to the prior year
• Income from operations of $14.2 million, down 3.7% as compared with $14.7 million in Q3 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, up 7.3% as compared with Cdn$9.8 million in Q3 2015
• Paid monthly dividends of C$0.0975 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 83.1% as compared with 89.8% in Q3 2015
• Appointed James Rolfe as Chief Development Officer of the Company
• Closed previously announced transaction to acquire an indirect 62%, and ultimately, in stages, an 83%, interest in Unity Medical and Surgical Hospital ("Unity"), a physician-owned medical and surgical hospital located in Mishawaka, Indiana
• Ambulatory surgical center in Sioux Falls South Dakota acquired by Sioux Falls Specialty Hospital for approximately $20.0 million effective October 3, 2016

_____________________

1 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.

"Along with growth, an equally important initiative we are focusing on is aligning our operating expenses with our payor mix," added Mr. Reynolds. "This includes addressing supply chain costs and matching our labour costs to case volume. We are committed to continuing to deliver the high quality of care our facilities are known for, in an efficient and cost-effective manner."

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)		2016	% change	2015	2016	% change	2015
Revenue from continuing operations		78,806	7.8%	73,137	231,479	5.7%	219,018
Consolidated operating expenses		64,624	10.6%	58,404	188,708	9.6%	172,120
Income from operations		14,182	-3.7%	14,733	42,771	-8.8%	46,898
	Finance Costs (Net interest expense)	1,079	39.4%	774	2,512	10.6%	2,271
	Finance Costs (Changes in values of derivative instruments and gain/loss on foreign currency)	15,210		(266)	48,859		(15,459)
	Income tax expenses (recovery)	(1,730)	-147.9%	3,614	(9,578)	-162.9%	15,219
Consolidated income from operations		(377)	-103.6%	10,611	978	-97.8%	44,867
Attributable to:
	Owners of the Corporation	(6,836)	-286.6%	3,663	(18,360)	-177.6%	23,674
	Non-controlling interest	6,459	-7.0%	6,948	19,338	-8.8%	21,193
Earnings per share
	Basic	(0.22)		0.12	(0.59)		0.76
	Diluted	(0.22)		0.08	(0.59)		0.32
Cash available for distribution (C$)		10,510	7.3%	9,796	32,904	-1.3%	33,330
Distributions (C$)		8,732	-0.7%	8,795	26,197	-0.8%	26,421
Cash available for distribution per common share (C$)		0.34	9.7%	0.31	1.06		1.06
Distributions per common share (C$)		0.28		0.28	0.84		0.84
Payout Ratio		83.1%	-7.5%	89.8%	79.6%	0.4%	79.3%

As at September 30, 2016, the Company had consolidated net working capital of $60.5 million, including cash and cash equivalents and short-term investments of $70.9 million and accounts receivable of $$50.8 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 $63.1 million as at September 30, 2016 compared with $35.4 million as at December 31, 2015.

Medical Facilities' complete third quarter 2016 financial statements and management's discussion and analysis will be issued and filed on SEDAR at www.sedar.com on Thursday, November 10, 2016 and will be available on the same day on Medical Facilities' website at www.medicalfacilitiescorp.ca.

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 nine-month period ended September 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 September 30, 2016.

As at September 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, November 10, 2016 at 8:30 am ET to discuss its third 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, November 17, 2016 by calling 416.849.0833 or 1.855.859.2056, reference number 2995612. A live audio webcast of the call will be available at http://bit.ly/2drm5Hl.

To view Medical Facilities Q3 2016 financial statements and notes, please click here: http://files.newswire.ca/940/MFC-Q32016.pdf

About Medical Facilities
Medical Facilities owns controlling interests in five specialty surgical hospitals located in Arkansas, Indiana, 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 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. In addition, Medical Facilities owns 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/2016/11/10/20161110_C2653_PDF_EN_815151.pdf

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]