Medical Facilities Corporation Reports Solid Third Quarter 2020 Financial Results

Quarter highlighted by rebound in surgical case volumes and improved profitability

TORONTO, Nov. 12, 2020 /CNW/ - Medical Facilities Corporation ("Medical Facilities," "MFC," or the "Corporation") (TSX: DR), reported its financial results today for the three-month and nine-month periods ended September 30, 2020. All amounts are expressed in U.S. dollars unless indicated otherwise.

Q3 2020 Summary
(For continuing operations¹ compared to Q3 2019)

• Facility service revenue totaled $96.3 million;
• Total revenue and other income increased 2.4% to $98.8 million, including $2.5 million of government stimulus income recognized by the surgical hospitals and ambulatory surgery centers ("ASC");
• Income from operations increased  to $17.6 million;
• Adjusted EBITDA² increased 9.6% to $24.6 million; and
• St. Luke's Surgery Center of Chesterfield ("St. Luke's ASC") opened and completed its first cases in the month of September.

"We are pleased to report that case volumes continued to rebound in the third quarter despite the ongoing COVID-19 pandemic," said Robert O. Horrar, President and CEO of Medical Facilities. "Total revenue and other income for the quarter was impacted by favourable shifts in case and payor mix and government stimulus income, which were partly offset by a decline in case volumes year-over-year. We are also pleased with the progress of St. Luke's ASC, which is officially opened and operational, and is ramping up as expected."

"While uncertainty surrounding the impact of COVID-19 remains, we maintain our focus on growing MFC and seeking opportunities to execute our ASC platform growth strategy," concluded Mr. Horrar.

Financial Results

Financial Results from Continuing Operations	For the three months ended			For the nine months ended
	September 30			September 30
(thousands of U.S. dollars, except per share amounts and where otherwise noted)	2020	% change	2019	2020	% change	2019
Facility service revenue	96,322	(0.2%)	96,536	256,743	(9.6%)	284,149
Government stimulus income	2,491	100.0%	-	23,636	100.0%	-
Total revenue and other income	98,813	2.4%	96,536	280,379	(1.3%)	284,149
Consolidated operating expenses	81,241	(21.5%)	103,475	234,186	(11.8%)	265,480
Income (loss) from operations	17,572	353.2%	(6,939)	46,193	147.4%	18,669
Finance costs (net interest expense)	2,216	15.8%	1,914	4,567	(24.0%)	6,009
Finance costs (changes in values of derivative instruments and gain/loss on foreign currency)	2,076	110.8%	(19,231)	2,525	111.0%	(22,872)
Share of equity loss in associates	672	100.0%	-	1,606	1,490.1%	101
Income tax expense	2,786	61.3%	1,727	5,689	(12.9%)	6,534
Net income	9,822	13.5%	8,651	31,806	10.1%	28,897
Attributable to:
Owners of the Corporation	2,998	(38.3%)	4,862	12,662	(16.8%)	15,211
Non-controlling interest	6,824	80.1%	3,789	19,144	39.9%	13,686
Earnings (loss) per share
Basic	$0.10	(37.5%)	$0.16	$0.41	(16.3%)	$0.49
Diluted	$0.10	143.5%	($0.23)	$0.41	920.0%	($0.05)

Net income attributable to owners of the Corporation fluctuates significantly between 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 nine months ended
	September 30			September 30
(thousands of U.S. dollars, except where otherwise noted)	2020	% change	2019	2020	% change	2019
Net income	9,822	13.5%	8,651	31,806	10.1%	28,897
Income tax expense	2,786	61.3%	1,727	5,689	(12.9%)	6,534
Share of equity loss in associates	672	100.0%	-	1,606	1,490.1%	101
Finance costs (income)	4,292	124.8%	(17,317)	7,092	142.1%	(16,863)
Depreciation and amortization	6,978	(5.0%)	7,345	21,068	(8.3%)	22,980
EBITDA^2	24,550	5,946.8%	406	67,261	61.5%	41,649
Transaction costs on sale of Unity Medical and Surgical Hospital	-	-	-	450	100.0%	-
Impairment of goodwill	-	(100.0%)	22,000	-	(100.0%)	22,000
Adjusted EBITDA	24,550	9.6%	22,406	67,711	6.4%	63,649
Distributable Cash Flow	For the three months ended			For the nine months ended
	September 30			September 30
(thousands of dollars, except per share amounts and percentage data)	2020	% change	2019	2020	% change	2019
Cash available for distribution^2 (C$)	12,719	140.4%	5,291	29,847	93.5%	15,421
Distributions (C$)	2,177	(75.1%)	8,749	6,532	(75.1%)	26,222
Distributions per common share (C$)	0.07	(75.0%)	0.28	0.21	(75.0%)	0.84
Payout ratio^2	17.1%	(89.7%)	165.3%	21.9%	(87.1%)	170.2%

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 6.41% on the September 30, 2020 closing price of $4.37 per common share.

As at September 30, 2020, MFC had consolidated net working capital of $54.1 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 nine-month periods ended September, 2020, will be filed on SEDAR at www.sedar.com on Thursday, November 12, 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 nine-month periods ended September 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, November 12, 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 http://bit.ly/MFC2020Q3. 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 a diverse portfolio of highly rated, high-quality surgical facilities in the United States. MFC's ownership includes controlling interest in four specialty surgical hospitals located in Arkansas, Oklahoma, and South Dakota, and an ambulatory surgery center ("ASC") located in California. In addition, through a partnership with NueHealth LLC, Medical Facilities owns controlling interest in five ambulatory surgery centers located in Michigan, Missouri, Nebraska, Ohio, and Pennsylvania. MFC also owns non-controlling interests in a specialty surgical hospital in Indiana and an ASC in Missouri. 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 ASCs 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