Medical Facilities Corporation Reports Second Quarter 2020 Financial Results

TORONTO, Aug. 13, 2020 /CNW/ - Medical Facilities Corporation ("Medical Facilities," "MFC," or the "Corporation") (TSX: DR), reported its financial results today for the three-month and six-month periods ended June 30, 2020. All amounts are expressed in U.S. dollars unless indicated otherwise.

Q2 2020 Summary
(For continuing operations¹ compared to Q2 2019)

• Total revenue and other income, which includes $21.1 million of government stimulus income received by the surgical hospitals and ambulatory surgery centers, decreased 5.8% to $88.8 million, largely as a result of reductions in elective surgeries due to the COVID-19 pandemic;
• Facility service revenue decreased 28.2% to $67.7 million;
• Income from operations increased 37.7% to $17.6 million;
• EBITDA² increased 19.9% to $24.6 million; and
• On June 30, 2020, the Corporation sold the real estate assets underlying Unity Medical and Surgical Hospital for net proceeds of $24.7 million;

"While our case volumes were impacted heavily by COVID-19 in the month of April, by mid-May volumes began to rebound as restrictions were lifted on elective surgeries," said Robert O. Horrar, President and CEO of Medical Facilities. "The recovery was more pronounced in June with volumes returning close to prior year levels. Our physician partners, staff and first line providers have all played an incredible role in helping ensure that our facilities were able to continue providing the same high standard of care for which they are known."

"COVID 19 has had an unprecedented impact on our society and in particular, our healthcare system. While our financial results for the first half of the year have been impacted by the pandemic, the close of our real estate transaction at the end of June strengthened our balance sheet. And, in addition to the opening of St. Luke's Surgery Center of Chesterfield this month, we remain focused on growth opportunities."

Financial Results

All of MFC's facilities were impacted by the COVID-19 pandemic during the second quarter as elective cases were restricted, either voluntarily or by government mandate, including the temporary closure of three of the MFC Nueterra ambulatory surgery centers. The negative impact of these restrictions and expenses related to COVID-19 were partly offset by the recognition of government stimulus income of $21.1 million received by the facilities during the quarter.

Financial Results from Continuing Operations	For the three months ended			For the six months ended
	June 30			June 30
(thousands of U.S. dollars, except per share amounts and where otherwise noted)	2020	% change	2019	2020	% change	2019
Facility service revenue	67,659	(28.2%)	94,230	160,421	(14.5%)	187,613
Government stimulus income	21,145	100.0%	-	21,145	100.0%	-
Total revenue and other income	88,804	(5.8%)	94,230	181,566	(3.2%)	187,613
Consolidated operating expenses	71,218	(12.6%)	81,461	152,945	(5.6%)	162,005
Income from operations	17,586	37.7%	12,769	28,621	11.8%	25,608
Finance costs (net interest expense)	915	(57.4%)	2,146	2,351	(42.6%)	4,095
Finance costs (changes in values of derivative instruments and gain/loss on foreign currency)	5,535	128.9%	(19,152)	449	112.3%	(3,641)
Share of equity loss in associates	476	366.7%	102	934	824.8%	101
Income tax expense	3,283	(51.4%)	6,752	2,903	(39.6%)	4,807
Net income	7,377	(67.8%)	22,921	21,984	8.6%	20,246
Attributable to:
Owners of the Corporation	241	(98.7%)	18,555	9,664	(6.6%)	10,348
Non-controlling interest	7,136	63.4%	4,366	12,320	24.5%	9,898
Earnings per share
Basic	$0.01	(98.3%)	$0.60	$0.31	(6.1%)	$0.33
Diluted	$0.01	(92.9%)	$0.14	$0.30	50.0%	$0.20

Net income attributable to owners of the Corporation fluctuates significantly between the periods, primarily due to variations in non-cash finance costs (change in the value of 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 and Adjusted EBITDA	For the three months ended			For the six months ended
	June 30			June 30
(thousands of U.S. dollars, except where otherwise noted)	2020	% change	2019	2020	% change	2019
Net income	7,377	(67.8%)	22,921	21,984	8.6%	20,246
Income tax expense	3,283	(51.4%)	6,752	2,903	(39.6%)	4,807
Share of equity loss in associates	476	366.7%	102	934	824.8%	101
Finance costs (income)	6,450	137.9%	(17,006)	2,800	516.7%	454
Depreciation and amortization	7,017	(9.5%)	7,757	14,090	(9.9%)	15,635
EBITDA	24,603	19.9%	20,526	42,711	3.6%	41,243
Transaction costs on sale of Unity Medical and Surgical Hospital	-	-	-	450	100.0%	-
Adjusted EBITDA^2	24,603	19.9%	20,526	43,161	4.7%	41,243

Distributable Cash Flow	For the three months ended			For the six months ended
	June 30			June 30
(thousands of U.S. dollars, except per share amounts and where otherwise noted)	2020	% change	2019	2020	% change	2019
Cash available for distribution^2 (C$)	8,225	68.8%	4,872	17,056	68.4%	10,127
Distributions (C$)	2,178	(75.1%)	8,739	4,355	(75.1%)	17,473
Distributions per common share (C$)	0.070	(75.1%)	0.281	0.140	(75.1%)	0.562
Payout ratio^2	26.5%	(85.2%)	179.0%	25.5%	(85.2%)	172.4%

During the quarter, MFC paid a quarterly cash dividend of C$0.07 per common share (or C$0.28 per share on an annualized basis), which represented an annualized yield of 6.45% on the June 30, 2020 closing price of $4.34 per common share.

As at June 30, 2020, MFC had consolidated net working capital of $74.3 million, compared to $71.5 million on December 31, 2019.

MFC's financial statements and management's discussion and analysis, for the three-month and six-month periods ended June 30, 2020, will be filed on SEDAR at www.sedar.com on Thursday, August 13, 2020 and will also be available on Medical Facilities' website at www.medicalfacilitiescorp.ca.

¹ Continuing operations is defined as consolidated operations excluding UMASH and RRI Mishawaka Hospital, LP which were treated as discontinued operations in the financial results for the three-month and six-month periods ended June 30, 2020.

² 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.

Notice of Conference Call

Management of MFC will host a conference call today, August 13, 2020 at 8:30 am ET to discuss its second quarter and year-to-date financial results. All interested parties may join the conference call by dialing 647-427-7450 or 1-888-231-8191 approximately 15 minutes prior to the call to secure a line.

A live audio webcast of the call will be available at https://bit.ly/MFC2020Q2. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived on MFC's website following the call date.

About Medical Facilities

Medical Facilities Corporation ("MFC"), in partnership with physicians, owns surgical facilities in the United States. MFC's portfolio includes controlling interest in four specialty surgical hospitals located in Arkansas, Oklahoma, and South Dakota, and an ambulatory surgery center located in California. MFC also has a non-controlling interest in a specialty surgical hospital in Indiana. In addition, through a partnership with NueHealth LLC, Medical Facilities owns controlling interest in six ambulatory surgery centers located in 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. 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

David Watson, 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