Medical Facilities Corporation Reports 2018 Fourth Quarter and Year End Financial Results

Higher revenue and case volume driven by MFC Nueterra and organic growth

TORONTO, March 14, 2019 /CNW/ - Medical Facilities Corporation ("Medical Facilities," "MFC," or the "Corporation") (TSX: DR), reported its financial results today for the fourth quarter and year ended December 31, 2018. All amounts are expressed in U.S. dollars unless indicated otherwise.

Q4 2018 Summary
(Compared to Q4 2017)

• Revenue increased 10.8% to $123.3 million
• Surgical cases increased by 37.5%
• Income from operations increased 50.3% to $24.9 million
• Adjusted EBITDA¹ increased 1.0% to $32.4 million
• Cash available for distributions¹ increased 13.5% to C$18.9 million
• Payout ratio¹ was 46.2% compared to 52.3% in Q4 2017

Year 2018 Summary
(Compared to 2017 year end results)

• Revenue increased 12.0% to $431.6 million
• Surgical cases increased by 38.1%
• Income from operations increased 25.4% to $73.4 million
• Adjusted EBITDA¹ increased 4.6% to $99.0 million
• Cash available for distributions¹ decreased 5.6% to C$48.8 million
• Payout ratio¹ was 71.4% compared to 67.5% in 2017

"A strong fourth quarter culminated in MFC achieving record revenue for the year," said Robert O. Horrar, President and CEO of Medical Facilities. "Same Facility surgical case volume was higher for the quarter and the year, however the strongest contributor to our growth was the seven Ambulatory Surgical Centers acquired through our MFC Nueterra partnership in early 2018. We continue to invest in our business, including adding new services such as our urgent care centers, and are actively seeking future acquisitions. Continuing to build scale and diversifying our revenue base better positions us for capitalizing on the growth drivers in the U.S. healthcare market."

Financial Results	For the three months ended			For the year ended
	December 31			December 31
(thousands of U.S. dollars, except per share amounts and where otherwise noted)	2018	% change	2017	2018	% change	2017
Facility service revenue	123,283	10.8%	111,266	431,602	12.0%	385,329
Consolidated operating expenses	98,402	3.9%	94,710	358,218	9.6%	326,828
Income from operations	24,881	50.3%	16,556	73,384	25.4%	58,501
Finance costs (net interest expense)	1,778	46.6%	1,213	6,458	9.6%	5,892
Finance costs (changes in values of derivative instruments and gain/loss on foreign currency)	883	118.7%	(4,733)	6,405	1,368.3%	(505)
Income tax expense	2,257	(10.6%)	2,525	8,972	37.3%	6,535
Net income	19,963	13.7%	17,551	51,549	10.7%	46,579
Attributable to:
Owners of the Corporation	8,264	(21.6%)	10,545	20,927	1.4%	20,637
Non-controlling interest	11,699	67.0%	7,006	30,622	18.0%	25,942

Financial Results		For the three months ended December 31			For the year ended December 31
(thousands of U.S. dollars, except per share amounts and where otherwise noted)		2018	% change	2017	2018	% change	2017
Earnings per share
	Basic	0.27	(20.6%)	0.34	0.68	1.5%	0.67
	Diluted	0.22	10.0%	0.20	0.61	13.0%	0.54

Net income attributable to owners of the Corporation fluctuates significantly between the periods, primarily due to variations in non-cash finance costs (changes in the values of convertible debentures and exchangeable interest liability), and income taxes; these charges are incurred at the corporate level rather than at the Facility level.

Reconciliation of Net Income to EBITDA	For the three months ended			For the year ended
	December 31			December 31
(thousands of U.S. dollars, except where otherwise noted)	2018	% change	2017	2018	% change	2017
Net income	19,963	13.7%	17,551	51,549	10.7%	46,579
Income tax expenses	2,257	(10.6%)	2,525	8,972	37.3%	6,535
Finance costs	2,661	175.6%	(3,520)	12,863	138.8%	5,387
Depreciation and amortization	7,511	5.4%	7,123	25,634	(7.6%)	27,746
EBITDA	32,392	36.8%	23,679	99,018	14.8%	86,247
Goodwill impairment		(100.0%)	8,400		(100.0%)	8,400
Adjusted EBITDA	32,392	1.0%	32,079	99, 018	4.6%	94 ,647

Distributable Cash Flow	For the three months ended			For the year ended
	December 31			December 31
(thousands of U.S. dollars, except per share amounts and where otherwise noted)	2018	% change	2017	2018	% change	2017
Cash available for distribution (C$)	18,904	13.5%	16,654	48,822	(5.6%)	51,710
Distributions (C$)	8,734	0.3%	8,705	34,864	-	34,881
Distributions per common share (C$)	0.28		0.28	1.13		1.13
Payout ratio	46.2%		52.3%	71.4%		67.5%

During the quarter, MFC paid monthly cash dividends of C$0.09375 per common share (or C$1.125 per share on an annualized basis), which represented an annualized yield of 7.48% on the December 31, 2018 closing price of $15.04 per common share.

As at December 31, 2018, MFC had consolidated net working capital of $33.2 million, compared to $33.8 million a year earlier.

Medical Facilities' 2018 year end financial statements and management's discussion and analysis will be issued and filed on SEDAR at www.sedar.com on Thursday, March 14, 2019 and will also be available on Medical Facilities' website at www.medicalfacilitiescorp.ca.

Normal Course Issuer Bid ("NCIB")

During the year ended December 31, 2018, the Corporation did not purchase any of its common shares. As at December 31, 2018, the Corporation had 31,054,500 common shares outstanding.

Notice of Conference Call

Management of MFC will host a conference call today, March 14, 2019 at 8:30 am ET to discuss its fourth quarter and year end financial results. You can join the call by dialing 647-427-7450 or 1-888-231-8191. A replay of the call will be available until Thursday, March 21, 2019 by calling 416-849-0833 or 1-855-859-2056, using reference number 1198279. A live audio webcast of the call will be available at http://bit.ly/MFCQ42018.

About Medical Facilities

Medical Facilities, in partnership with physicians, owns surgical facilities in the United States. Medical Facilities' portfolio includes controlling interest in five specialty surgical hospitals located in Arkansas, Indiana, Oklahoma, and South Dakota, and an ambulatory surgery center located in California. In addition, through a partnership with NueHealth LLC, Medical Facilities owns controlling interest in seven ambulatory surgery centers located in Arkansas, Michigan, Missouri, Nebraska, Ohio, Oregon, and Pennsylvania. 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 ambulatory surgery centers specialize in outpatient surgical procedures, with patient stays of less than 24 hours. 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.

¹ 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.

SOURCE Medical Facilities Corporation

Tyler Murphy, 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