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Medical Facilities Corporation Reports 2018 Fourth Quarter and Year End Financial Results

March 14, 2019

Higher revenue and case volume driven by MFC Nueterra and organic growth

TORONTO, March 14, 2019 /CNW/ - Medical Facilities Corporation ("Medical Facilities," "MFC," or the "Corporation") (TSX: DR), reported its financial results today for the fourth quarter and year ended December 31, 2018. All amounts are expressed in U.S. dollars unless indicated otherwise.

Q4 2018 Summary
(Compared to Q4 2017)

  • Revenue increased 10.8% to $123.3 million
  • Surgical cases increased by 37.5%
  • Income from operations increased 50.3% to $24.9 million
  • Adjusted EBITDA1 increased 1.0% to $32.4 million
  • Cash available for distributions1 increased 13.5% to C$18.9 million
  • Payout ratio1 was 46.2% compared to 52.3% in Q4 2017

Year 2018 Summary
(Compared to 2017 year end results)

  • Revenue increased 12.0% to $431.6 million
  • Surgical cases increased by 38.1%
  • Income from operations increased 25.4% to $73.4 million
  • Adjusted EBITDA1 increased 4.6% to $99.0 million
  • Cash available for distributions1 decreased 5.6% to C$48.8 million
  • Payout ratio1 was 71.4% compared to 67.5% in 2017

"A strong fourth quarter culminated in MFC achieving record revenue for the year," said Robert O. Horrar, President and CEO of Medical Facilities. "Same Facility surgical case volume was higher for the quarter and the year, however the strongest contributor to our growth was the seven Ambulatory Surgical Centers acquired through our MFC Nueterra partnership in early 2018. We continue to invest in our business, including adding new services such as our urgent care centers, and are actively seeking future acquisitions. Continuing to build scale and diversifying our revenue base better positions us for capitalizing on the growth drivers in the U.S. healthcare market."




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)

2018

% change

2017

2018

% change

2017

Facility service revenue

123,283

10.8%

111,266

431,602

12.0%

385,329

Consolidated operating expenses

98,402

3.9%

94,710

358,218

9.6%

326,828

Income from operations

24,881

50.3%

16,556

73,384

25.4%

58,501

Finance costs (net interest expense)

1,778

46.6%

1,213

6,458

9.6%

5,892

Finance costs (changes in values of
derivative instruments and gain/loss on
foreign currency)

883

118.7%

(4,733)

6,405

1,368.3%

(505)

Income tax expense

2,257

(10.6%)

2,525

8,972

37.3%

6,535

Net income

19,963

13.7%

17,551

51,549

10.7%

46,579

Attributable to:







Owners of the Corporation

8,264

(21.6%)

10,545

20,927

1.4%

20,637

Non-controlling interest

11,699

67.0%

7,006

30,622

18.0%

25,942

 




Financial Results

For the three months
ended December 31

For the year ended

December 31

(thousands of U.S. dollars, except per share
amounts and where otherwise noted)

2018

% change

2017

2018

% change

2017

Earnings per share








Basic

0.27

(20.6%)

0.34

0.68

1.5%

0.67


Diluted                                               

0.22

10.0%

0.20

0.61

13.0%

0.54

 

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

For the year ended

December 31

December 31

(thousands of U.S. dollars, except where
otherwise noted)

2018

% change

2017

2018

% change

2017

Net income

19,963

13.7%

17,551

51,549

10.7%

46,579

Income tax expenses

2,257

(10.6%)

2,525

8,972

37.3%

6,535

Finance costs

2,661

175.6%

(3,520)

12,863

138.8%

5,387

Depreciation and amortization

7,511

5.4%

7,123

25,634

(7.6%)

27,746

EBITDA

32,392

36.8%

23,679

99,018

14.8%

86,247

Goodwill impairment


(100.0%)

8,400


(100.0%)

8,400

Adjusted EBITDA

32,392

1.0%

32,079

99, 018

4.6%

94 ,647

 




Distributable Cash Flow

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)

2018

% change

2017

2018

% change

2017

Cash available for distribution (C$)

18,904

13.5%

16,654

48,822

(5.6%)

51,710

Distributions (C$)

8,734

0.3%

8,705

34,864

-

34,881

Distributions per common share (C$)

0.28


0.28

1.13


1.13

Payout ratio

46.2%


52.3%

71.4%


67.5%

 

During the quarter, MFC 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 7.48% on the December 31, 2018 closing price of $15.04 per common share.

As at December 31, 2018, MFC had consolidated net working capital of $33.2 million, compared to $33.8 million a year earlier.

Medical Facilities' 2018 year end financial statements and management's discussion and analysis will be issued and filed on SEDAR at www.sedar.com on Thursday, March 14, 2019 and will also be available on Medical Facilities' website at www.medicalfacilitiescorp.ca.

Normal Course Issuer Bid ("NCIB")

During the year ended December 31, 2018, the Corporation did not purchase any of its common shares. As at December 31, 2018, the Corporation had 31,054,500 common shares outstanding.

Notice of Conference Call

Management of MFC will host a conference call today, March 14, 2019 at 8:30 am ET to discuss its fourth quarter and year end 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, March 21, 2019 by calling 416-849-0833 or 1-855-859-2056, using reference number 1198279. A live audio webcast of the call will be available at http://bit.ly/MFCQ42018.

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, investors@medicalfc.com; Trevor Heisler, Investor Relations, NATIONAL Capital Markets, 416.848.1434, theisler@national.ca