Medical Facilities Corporation Reports First Quarter 2019 Financial Results

TORONTO, May 9, 2019 /CNW/ - Medical Facilities Corporation ("Medical Facilities," "MFC," or the "Corporation") (TSX: DR), reported its financial results today for the first quarter ended March 31, 2019. All amounts are expressed in U.S. dollars unless indicated otherwise.

Q1 2019 Summary
(Compared to Q1 2018)

• Revenue increased 1.5% to $99.1 million;
• Surgical case volume increased 14.2%;
• Income from operations decreased 27.8% to $10.2 million;
• EBITDA¹ was $19.3 million compared to $20.1 million in Q1 2018;
• Cash available for distributions¹ was C$5.3 million versus C$9.4 million in Q1 2018;
• The payout ratio¹ was 166.3% for the quarter compared to 92.2% in Q1 2018.

"Our first quarter results underscore the importance of expanding our service offering and revenue base," said Robert O. Horrar, President and CEO of Medical Facilities. "Our business is subject to variations in case volumes, as well as changes in payor and case mix. This past quarter, the changes in our payor and case mix resulted in lower revenue growth and impacted our operating results. That being said, our strategy has not changed. We remain focused on capitalizing on opportunities to diversify our assets through strategic acquisitions and development of physician-aligned ambulatory surgical centers and surgical hospitals, as well as driving same facility growth."

Financial Results

Medical Facilities' 2019 financial results include the impact of IFRS 16, a substantial change to lease accounting standards, effective January 1, 2019. Medical Facilities adopted IFRS 16 using the modified retrospective approach and the Corporation's comparative information was not restated. As a result, the comparability of MFC's 2019 EBITDA to periods prior to January 1, 2019 is impacted.

Financial Results	For the three months ended March 31
(thousands of U.S. dollars, except per share amounts and where otherwise noted)	2019	% change	2018
Facility service revenue	99,095	1.5%	97,618
Consolidated operating expenses	88,896	6.5%	83,495
Income from operations	10,199	(27.8%)	14,123
Finance costs (net interest expense)	4,665	20.0%	3,889
Finance costs (changes in values of derivative instruments and gain/loss on foreign currency)	13,571	688.8%	(2,304)
Income tax expense	(2,754)	(237.1%)	2,009
Net income	(5,283)	(150.2%)	10,529
Attributable to:
Owners of the Corporation	(10,285)	(343.3%)	4,228
Non-controlling interest	5,002	(20.6%)	6,301

Financial Results		For the three months ended March 31
(thousands of U.S. dollars, except per share amounts and where otherwise noted)		2019	% change	2018
Earnings per share
Basic		(0.33)	(335.7%)	0.14
Diluted		(0.33)	(375.0%)	0.12

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 March 31
(thousands of U.S. dollars, except where otherwise noted)	2019	% change	2018
Net income	(5,283)	(150.2%)	10,529
Income tax expenses	(2,754)	(237.1%)	2,009
Finance costs	18,236	1,050.5%	1,585
Depreciation and amortization	9,149	53.9%	5,945
EBITDA	19,348	(3.6%)	20,068

Distributable Cash Flow	For the three months ended March 31
(thousands of U.S. dollars, except per share amounts and where otherwise noted)	2019	% change	2018
Cash available for distribution (C$)	5,254	(44.3%)	9,438
Distributions (C$)	8,734	0.3%	8,705
Distributions per common share (C$)	0.28	-	0.28
Payout ratio	166.3%	80.4%	92.2%

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 6.38% on the March 29, 2019 closing price of $17.63 per common share.

As at March 31, 2019, MFC had consolidated net working capital of $15.9 million, compared to $33.2 million on December 31, 2018.

Medical Facilities' 2019 first quarter financial statements and management's discussion and analysis will be issued and filed on SEDAR at www.sedar.com on Thursday, May 9, 2019 and will also be available on Medical Facilities' website at www.medicalfacilitiescorp.ca.

Normal Course Issuer Bid ("NCIB")

During the quarter ended March 31, 2019, the Corporation did not purchase any of its common shares. As at March 31, 2019, the Corporation had 31,054,500 common shares outstanding.

Notice of Conference Call

Management of MFC will host a conference call today, May 9, 2019 at 8:30 am ET to discuss its first quarter 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, May 16, 2019 by calling 416-849-0833 or 1-855-859-2056, using reference number 2892579. A live audio webcast of the call will be available at http://bit.ly/MFC2019Q1.

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.

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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