Medical Facilities Corporation Reports First Quarter 2015 Financial Results

TORONTO, May 14, 2015 /CNW/ - Medical Facilities Corporation ("Medical Facilities" or the "Company") (TSX: DR), announced today its financial and operating results for the three months ended March 31, 2015.  All amounts are expressed in U.S. dollars unless indicated otherwise.

First Quarter 2015 Summary

• Consolidated facility service revenue of $75.6 million, up 3.7% as compared with $72.9 million in Q1 2014
• Consolidated income from operations of $17.2 million, up 24.9% as compared with $13.8 million in Q1 2014
• Cash available for distribution¹ of Cdn$11.2 million, up 26.0% as compared with Cdn$8.9 million in Q1 2014
• Payout ratio¹ of 78.5% as compared with 98.9% in Q1 2014

"We are pleased to report improved performance on key metrics of our business, including case counts, payor mix and ancillary revenue, leading to a 3.7% increase in facility service revenue which resulted in a 24.9% increase in income from operations. All five of our specialty surgical hospitals recorded income from operations margins which were higher than a year earlier, with three of our specialty surgical hospitals recording double digit percentage increases in income from operations. These results were reflected in an improved payout ratio of 78.5%. We will continue to focus our efforts on initiatives that will help sustain and build the operating margins of our Centers," said Dr. Donald Schellpfeffer, CEO of Medical Facilities.

Financial and Operating Results
Three months ended March 31, 2015

The Company generated cash available for distribution ("CAFD") of Cdn$11.2 million, or Cdn$0.358 per common share, and declared dividends of Cdn$8.8 million, or Cdn$0.281 per common share, representing a payout ratio of 78.5% compared to 98.9% a year earlier. In U.S.-dollar terms, CAFD increased by US$1.0 million primarily due to stronger cash flows from the Centers and lower corporate expenses and debt service costs, which were partially offset by higher foreign currency losses on foreign exchange forward contracts which matured in the respective periods and higher provision for income taxes

Consolidated facility service revenue ("revenue") was $75.6 million, an increase of $2.7 million or 3.7% from $72.9 million a year earlier. The growth in revenue was primarily attributable to the increased revenues from surgical cases, pain management procedures and ancillary services and a favourable shift in payor mix, which were partially offset by less favourable changes in case mix.

Consolidated operating expenses, including salaries and benefits, drugs and supplies, general and administrative expenses, depreciation of property and equipment, and amortization of other intangibles, ("consolidated expenses") totalled $58.3 million, or 77.2% of revenue, compared with consolidated expenses of $59.1 million, or 81.1% of revenue, a year ago. The decline in consolidated expenses was primarily attributable to the changes in case mix, cost savings and vendor rebates which drove down the cost of drugs and supplies, lower salaries and benefits at the corporate level and a decline in amortization of other intangibles.

Consolidated income from operations was $17.2 million, or 22.8% of revenue, a $3.4 million or 24.9% increase from consolidated income from operations of $13.8 million, or 18.9% of revenue, for the same period a year ago, reflecting growth in revenue and a decline in consolidated expenses.

^1Cash available for distribution and payout ratio are non-IFRS 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 measures, including a reconciliation of each of these non-IFRS 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.

Consolidated net income was $18.8 million, or $0.359 per share (basic) and $0.052 per share (fully diluted) compared with a consolidated net loss of $2.1 million, or a loss of $0.276 per share (basic and fully diluted), for the same period in 2014. The increase of $20.9 million in consolidated net income was attributable to the impact of the decline in the values of exchangeable interest liability and convertible debentures as well as improved operating performance, partially offset by the increase in income tax expense.

As at March 31, 2015, the Company had consolidated net working capital of $59.0 million, including cash and cash equivalents and short-term and long-term investments of $40.2 million, and accounts receivable of $39.6 million, compared with net working capital of $61.9 million, including cash and cash equivalents and short-term and long-term investments of $54.2 million, and accounts receivable of $47.0 million, as at December 31, 2014. Long-term debt at the Centers' level, including the current portion, was $40.6 million as at March 31, 2015 compared with $40.2 million as at December 31, 2014.

Medical Facilities' complete first quarter 2015 financial statements and management's discussion and analysis will be issued and filed on SEDAR at www.sedar.com on Thursday, May 14, 2015 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 three months ended March 31, 2015, the Company purchased 12,100 of its common shares at an average price of Cdn$16.63 per share, for a total consideration of Cdn$0.2 million.

As at March 31, 2015, the Company had 31,317,498 common shares outstanding.

Notice of Conference Call
Management of Medical Facilities will host a conference call today, Thursday, May 14, 2015 at 9:00 am ET to discuss its first quarter 2015 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, May 21, 2015 by calling 416.849.0833 or 1.855.859.2056, reference number 32789595.

To view Medical Facilities Q1 2015 financial statements and notes, please click here:” http://files.newswire.ca/940/MFC_Q1_2015.pdf

About Medical Facilities
Medical Facilities owns controlling interests in five 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. 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/2015/05/14/20150514_C4194_PDF_EN_16634.pdf

Michael Salter, Chief Financial Officer, Medical Facilities Corporation, 416.848.7380 or 1.877.402.7162, [email protected]; Renée Lam, Investor Relations, TMX Equicom, 416.815.0700 or 1.800.385.5451 ext. 258, [email protected]