Medical Facilities Corporation Reports Fourth Quarter and Full Year 2017 Financial Results

TORONTO, March 22, 2018 /CNW/ - Medical Facilities Corporation ("Medical Facilities," "MFC," or the "Company") (TSX: DR), reported its financial results today for the three-month and full year periods ended December 31, 2017. All amounts are expressed in U.S. dollars unless indicated otherwise.

Q4 2017 Summary
(compared to three months ended December 31, 2016)

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Medical Facilities Corporation Reports Fourth Quarter and Full Year 2017 Financial Results (CNW Group/Medical Facilities Corporation)

• Revenue increased by 3.0% to $111.3 million from $108.0 million
• Surgical cases increased by 3.1%
• Income from operations decreased by 34.6% to $16.6 million, reflecting the impact of a non-cash, $8.4 million goodwill impairment charge
• Adjusted EBITDA¹ decreased by 0.6% to $32.1 million from $32.3 million
• Cash available for distribution¹ decreased by 6.5% to Cdn$16.7 million, from Cdn$17.8 million
• Payout ratio¹ of 52.3% as compared with 49.0%

Year 2017 Summary
(compared to the year ended December 31, 2016)

• Increased revenue by 13.5% to $385.3 million from $339.5 million
• Income from operations decreased by 14.1% to $58.5 million, reflecting the impact of a non-cash, $8.4 million goodwill impairment charge and the CEO transition charge of $2.0 million
• Adjusted EBITDA¹ increased by 4.3% to $94.6 million from $90.7 million
• Cash available for distribution¹ increased by 2.1% to Cdn$51.7 million, from Cdn$50.7 million
• Payout ratio¹ was 67.5% as compared with 69.0%
• Paid monthly dividends of C$0.09375 per share, or C$1.125 per share on an annualized basis

Subsequent to the year end

• On February 1, 2018, MFC completed the acquisition of seven ambulatory surgical centers for US$46.5 million through partnership with NueHealth LLC.

"In 2017, our Facilities continued to perform at a high standard, generating growth in surgery volume and achieving record levels of revenue and growth in adjusted EBITDA. As well, we continued to execute on our strategy to grow both organically and through acquisition, with progress on all fronts," said Robert O. Horrar, President and CEO of Medical Facilities. "In addition, we took some important measures to better position MFC for future growth. One was initiating our joint venture with NueHealth LLC, completed in February 2018. Our combined skills of facility management, acquisition and valuation provide us with a strong platform for growth. Also, a goodwill impairment of $8.4 million was charged relating to Unity Hospital and our IMD hospital service business. This non-cash charge does not affect our cash balances, liquidity or operating cash flows. Notwithstanding this charge, management continues to believe that strategies are in place to deliver improved results."

As at December 31, 2017, the Company had consolidated net working capital of $33.8 million, including cash and cash equivalents and short-term investments of $65.0 million and accounts receivable of $63.5 million, compared with net working capital of $74.0 million, including cash and cash equivalents and short-term and long-term investments of $67.6 million, and accounts receivable of $61.1 million, as at December 31, 2016. Long-term debt at the Centers' level, including the current portion, was $65.1 million and the corporate credit facility was $47.8 million as at December 31, 2017 compared with $76.9 million of total long-term debt at the Centers' level and the corporate credit facility of $47.8 million as at December 31, 2016.

Medical Facilities' complete fourth quarter 2017 financial statements and management's discussion and analysis will be issued and filed on SEDAR at www.sedar.com on Thursday, March 22, 2018 and will be available on the same day on Medical Facilities' website at www.medicalfacilitiescorp.ca.

Notice of Conference Call

Management of Medical Facilities will host a conference call today, Thursday, March 22, 2018 at 8:30 am ET to discuss its fourth quarter 2017 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, March 29, 2018 by calling 416.849.0833 or 1.855.859.2056, reference number 3992817. A live audio webcast of the call will be available at http://bit.ly/2HYxkCA.

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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.

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)			2017	% change	2016	2017	%change	2016
Facility service revenue			111,266	3.0%	107,994	385,329	13.5%	339,472
Consolidated operating expenses			94,710	14.5%	82,691	326,828	20.4%	271,399
Income from operations			16,556	(34.6%)	25,303	58,501	(14.1%)	68,073
		Finance costs (net interest expense)	1,213	30.5%	1,745	5,892	38.4%	4,258
		Finance costs (changes in values of derivative instruments and gain/loss on foreign currency)	(4,733)	(80.1%)	(23,737)	(505)	(102.0%)	25,121
		Income tax expense (recovery)	2,525		8,584	6,535		(994)
Income (loss) for the period from continuing operations			17,551	(54.7%)	38,711	46,579	17.4%	39,688
	Attributable to:
		Owners of the Corporation	10,545	(62.5%)	28,111	20,637	111.7%	9,750
		Non-controlling interest	7,006	(33.9%)	10,600	25,942	(13.3%)	29,938
Earnings per share
		Basic	0.34		0.91	0.67		0.31
		Diluted	0.20		0.31	0.54		0.30
Cash available for distribution (C$)			16,654	(6.5%)	17,805	51,710	2.1%	50,655
Distributions (C$)			8,705	(0.3%)	8,732	34,881	(0.1%)	34,929
Cash available for distribution per common share (C$)			0.54	(5.3%)	0.57	1.67	2.5%	1.63
Distributions per common share (C$)			0.28		0.28	1.13		1.13
Payout ratio			52.3%	6.7%	49.0%	67.5%	(2.2%)	69.0%
Income (loss) for the period from continuing operations			17,551	(54.7%)	38,711	46,579	17.4%	39,688
Income tax expense (recovery)			2,525		8,584	6,535		(994)
Finance costs			(3,520)		(21,992)	5,387		29,379
Depreciation and amortization			7,123		6,961	27,746		22,631
EBITDA			23,679	(26.6%)	32,264	86,247	(4.9%)	90,704
Goodwill impairment			8,400			8,400
Adjusted EBITDA			32,079	(0.6%)	32,264	94,647	4.3%	90,704

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 year ended December 31, 2017, the Corporation purchased 95,600 of its common shares for Cdn$1.4 million. The Corporation did not purchase any of its common shares during the three-month period ended December 31, 2017.

As at December 31, 2017, the Company had 30,950,345 common shares outstanding.

To view Medical Facilities Q4 2017 financial statements and notes, please click here:
http://files.newswire.ca/940/MFC_FS_IFRS_YE_2017.pdf

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 majority 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. 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

Tyler Murphy, 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]