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Press release from CNW Group

Medical Facilities Corporation Reports 2013 First Quarter Financial Results

Wednesday, May 15, 2013

Medical Facilities Corporation Reports 2013 First Quarter Financial Results

06:00 EDT Wednesday, May 15, 2013

TORONTO, May 15, 2013 /CNW/ - Medical Facilities Corporation ("Medical Facilities" or the "Company") (TSX: DR), today reported its financial results for the three-month period ended March 31, 2013. All amounts are expressed in U.S. dollars unless indicated otherwise.

First Quarter 2013 Summary

  • Revenue of $72.9 million, as compared with $58.9 million in Q1 2012
  • Income from operations of $20.4 million, as compared with $21.9 million in Q1 2012
  • Cash available for distribution1 of Cdn$8.7 million, as compared with Cdn$9.8 million in Q1 2012
  • Payout ratio of 92.2%, as compared with 79.0% in Q1 2012

"Our payout ratio for the first quarter was 92.2%, which, while higher than the 79.0% reported in our strong first quarter last year, is still well within the range that we have experienced over the last eight quarters. We are extremely pleased with the results of our newest acquisition, Arkansas Surgical Hospital, which helped drive our consolidated quarterly revenue to $72.9 million. As we have noted in the past, operating results will fluctuate by quarter and by Center, and this quarter was no exception, with revenue and income from operations at three of our Centers being impacted by changes in case counts and case and payor mix. These fluctuations are normal and expected due to the nature of our business," stated Dr. Schellpfeffer, CEO of Medical Facilities. "We are pleased to report that holders of approximately 96% of our 7.5% convertible debentures used the conversion privilege and converted their holdings into 3,145,093 of the Company's common shares prior to their maturity on April 30, 2013. This increases the Company's share capital and public float by 11%," concluded Dr. Schellpfeffer.

Financial Results

Three months ended March 31, 2013
The Company generated cash available for distribution1 ("CAFD") of Cdn$8.7 million, or Cdn$0.306 per common share, and declared dividends of Cdn$8.0 million, or Cdn$0.282 per common share, representing a payout ratio of 92.2% for the quarter, higher than the 79.0% for the same quarter last year.

Consolidated facility service revenue ("revenue") was $72.9 million, an increase of 23.7% from revenue of $58.9 million for the first quarter of 2012. The increase was primarily due to revenue from Arkansas Surgical Hospital ("ASH"), which was acquired in December 2012.  Results at other Centers were mixed as two specialty hospitals recorded higher revenue due to a combination of increases in the number of pain management procedures, surgical cases, and inpatient cases, as well as annual price increases, while two specialty hospitals and the ambulatory surgery center experienced revenue declines due to unfavourable case mix and payor mix and a reduction in pain management cases.

Income from operations declined by 7.0% to $20.4 million, or 28.0% of revenue, from $21.9 million, or 37.2% of revenue, a year ago. The decline was a result of an increase in operating expenses attributable to increases in salaries and benefits at most Centers, higher drugs and supplies expenses related to changes in case mix and increases in complexity of cases and costs related to urgent and primary care initiatives and implementation of electronic health records.

Net income was $0.2 million, or a loss of $0.258 per share (basic and fully diluted) attributable to shareholders of the Company, compared with net income of $12.2 million, or earnings of $0.147 per share (basic and fully diluted), for the same quarter last year. The decrease was attributable to an increase in operating expenses, the changes in values of the exchangeable interest liability and convertible debentures, which increased in value by $11.1 million in aggregate during the quarter (resulting in a decrease in reported net income), compared with an increase in value by $4.4 million in aggregate during the same quarter last year, and losses on foreign currency contracts, partially offset by lower provision for current income taxes.

As at March 31, 2013, the Company had consolidated net working capital (excluding 7.5% convertible debentures classified as current liabilities) of $64.6 million, including cash and cash equivalents and short-term deposits of $47.9 million and patient accounts receivable of $44.8 million, compared with net working capital of $62.0 million, including cash and cash equivalents and short-term deposits of $46.7 million and patient accounts receivable of $46.9 million, as at December 31, 2012. Long-term debt at the Centers' level, including the current portion, was $42.3 million as at March 31, 2013 compared with $41.6 million as at December 31, 2012.

As at March 31, 2013, the Company had 28,622,908 common shares outstanding.  As at April 30, 2013, following the maturity of the 7.5% convertible debentures, the majority of which were converted into common shares prior to their maturity, the Company had 31,407,849 common shares outstanding.

Medical Facilities' complete 2013 first quarter financial statements and Management's Discussion and Analysis will be issued and filed on SEDAR on Wednesday, May 15, 2013 and will be available on the same day on Medical Facilities' website at www.medicalfacilitiescorp.ca.

_________________________
1 Cash available for distribution is a non-IFRS measure and is not intended to be representative of cash flows or results of operations determined in accordance with IFRS. Accordingly, Medical Facilities provides a reconciliation of cash available for distribution to reported cash provided by operating activities in the Corporation's MD&A. Investors are cautioned that cash available for distribution, as calculated by Medical Facilities, is unlikely to be comparable to similar measures used by other issuers.

Normal Course Issuer Bid
Under the normal course issuer bid ("NCIB") that commenced on May 15, 2012, the Company purchased 7,600 of its common shares during the first quarter at an average cost of Cdn$14.25.  Subsequent to March 31, 2013 and up to and including April 30, 2013, the Company purchased another 34,600 of its common shares at an average cost of Cdn$14.91.

All securities purchased under the NCIB are cancelled. 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.

Notice of Conference Call
Management of Medical Facilities will host a conference call today, Wednesday, May 15, 2013 at 9:00 am (ET) to discuss its 2013 first quarter 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 Wednesday, May 22, 2013 at midnight by calling 416-849-0833 or 1-855-859-2056, reference number 59291535.

To view Medical Facilities Q1 2013 financial statements and notes, please click here: http://files.newswire.ca/940/MFC_FS_IFRS_Q1_2013.pdf

About Medical Facilities
Medical Facilities owns controlling interests in five specialty surgical hospitals, located in South Dakota, Oklahoma and Arkansas, as well as an ambulatory surgery center in California. The specialty 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 center specializes 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.

PDF available at: http://stream1.newswire.ca/media/2013/05/15/20130515_C6902_DOC_EN_26708.pdf

SOURCE: Medical Facilities Corporation

For further information:

Michael Salter
Chief Financial Officer
Medical Facilities Corporation
(416) 848-7380 or 1-877-402-7162
investors@medicalfc.com

Salvador Diaz
Investor Relations
TMX Equicom
(416) 815-0700 or 1-800-385-5451 ext. 242
sdiaz@tmxequicom.com

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