Medical Facilities Corporation Reports Third Quarter 2018 Financial Results

TORONTO, Nov. 8, 2018 /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, 2018. All amounts are expressed in U.S. dollars unless indicated otherwise.

Q3 2018 Summary
(Compared to Q3 2017)

• Revenue increased 17.1% to $104.2 million
• Surgical cases increased by 47.4%
• Income from operations increased 32.9% to $16.5 million
• EBITDA¹ increased 17.1% to $22.6 million
• Cash available for distributions¹ decreased 23.4% to C$9.4 million
• Payout ratio¹ was 92.4% compared to 70.7% in Q3 2017

"Our strong financial results for the quarter are a testament to the diversification across our portfolio," said Robert O. Horrar, President and CEO of Medical Facilities. "Total revenue was up 17.1%, including organic growth of 7.4%, which was driven by increases at Unity Medical, Oklahoma Spine, and Black Hills Surgical Hospitals. Our EBITDA kept pace, also increasing at 17.1% for the quarter. Importantly, we are well positioned to capitalize on the growing demand for outpatient healthcare services. While organic growth remains a priority, our recently increased credit line and our MFC Nuehealth partnership improve our ability to pursue additional targets within our acquisition pipeline."

Financial Results	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)	2018	% change	2017	2018	% change	2017
Facility service revenue	104,207	17.1%	88,974	308,319	12.5%	274,063
Consolidated operating expenses	87,688	14.6%	76,542	259,816	11.9%	232,118
Income from operations	16,519	32.9%	12,432	48,503	15.6%	41,945
Finance costs (net interest expense)	3,763	0.8%	3,733	11,260	(1.3%)	11,404
Finance costs (changes in values of  derivative instruments and gain/loss on foreign currency)	2,534	(71.6%)	8,931	(1,058)	57.6%	(2,497)
Income tax expense	2,215	192.4%	(2,397)	6,715	67.5%	4,010
Net income	8,007	269.8%	2,165	31,586	8.8%	29,028
Attributable to:
Owners of the Corporation	2,135	160.0%	(3,560)	12,663	25.5%	10,092
Non-controlling interest	5,872	2.6%	5,725	18,923	(0.1%)	18,936
Financial Results	For the three months ended September 30			For the nine months ended September 30
(thousands of U.S. dollars, except per share amounts and where otherwise noted)	2018	% change	2017	2018	% change	2017
Earnings per share
Basic	0.07	163.6%	(0.11)	0.41	24.2%	0.33
Diluted	0.07	163.6%	(0.11)	0.39	18.2%	0.33

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 September 30			For the nine months ended September 30
(thousands of U.S. dollars, except where otherwise noted)	2018	%change	2017	2018	% change	2017
Net income	8,007	269.8%	2,165	31,586	8.8%	29,028
Income tax expenses	2,215	192.4%	(2,397)	6,715	67.5%	4,010
Finance costs	6,297	(50.3%)	12,664	10,202	14.5%	8,907
Depreciation and amortization	6,129	(11.4%)	6,916	18,123	(12.1%)	20,623
EBITDA	22,648	17.1%	19,348	66,626	6.5%	62,568
Distributable Cash Flow	For the three months ended September 30			For the nine months ended September 30
(thousands of U.S. dollars, except per share amounts and where otherwise noted)	2018	% change	2017	2018	% change	2017
Cash available for distribution (C$)	9,433	(23.4%)	12,318	30,394	(13.0%)	34,934
Distributions (C$)	8,714	-	8,713	26,130	(0.2%)	26,176
Distributions per common share (C$)	0.28		0.28	0.84		0.84
Payout ratio	92.4%		70.7%	86.0%		74.9%

During the quarter, the Corporation 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 7.84% on the September 28, 2018 closing price of $14.35 per common share.

As at September 30, 2018, the Corporation had consolidated net working capital of $51.6 million compared to $33.8 million as at December 31, 2017. The change was due mainly to the reclassification of the corporate credit facility to non-current after the facility was renewed in August 2018, offset partially by the use of cash to finance acquisitions.

Medical Facilities' complete third quarter 2018 financial statements and management's discussion and analysis will be issued and filed on SEDAR at www.sedar.com on Thursday, November 8, 2018 and will be available on the same day on Medical Facilities' website at www.medicalfacilitiescorp.ca.

Normal Course Issuer Bid ("NCIB")

During the nine months ended September 30, 2018, the Corporation did not purchase any of its common shares. As at September 30, 2018, the Corporation had 31,054,500 common shares outstanding.

Notice of Conference Call

Management of MFC will host a conference call today, November 8, 2018 at 8:30 am EDT to discuss its third 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, November 15, 2018 by calling 416-849-0833 or 1-855-859-2056, using reference number 5197046. A live audio webcast of the call will be available at https://bit.ly/2q1ElLm.

To view Medical Facilities Q3 2018 financial statements and notes, please click here: https://mma.prnewswire.com/media/781611/Medical_Facilities_Corporation_Medical_Facilities_Corporation_Re.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 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.

¹ 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.

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]