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Medical Facilities Corporation Reports First Quarter 2020 Financial Results

May 14, 2020

TORONTO, May 14, 2020 /CNW/ - Medical Facilities Corporation ("Medical Facilities," "MFC," or the "Corporation") (TSX: DR), reported its financial results today for the first quarter ended March 31, 2020. All amounts are expressed in U.S. dollars unless indicated otherwise.

COVID-19 Impact on Financial Results

The World Health Organization declared the novel coronavirus (COVID-19) outbreak a global pandemic on March 11, 2020. The pandemic began to impact the Corporation's and its healthcare facilities' operations in the latter half of March 2020, as various COVID-19 policies were implemented by healthcare facilities and federal and state governments. The impact of COVID-19 has varied in severity within the communities and states that MFC's facilities serve. At this time, it is difficult to estimate what impact COVID-19 will have on MFC's business and financial results for the full 2020 year.

Q1 2020 Summary

(For continuing operations2 compared to Q1 2019)

  • Revenue decreased 0.7% to $92.8 million;
  • Total surgical cases decreased by 8.6%;
  • Income from operations decreased 14.1% to $11.0 million;
  • Adjusted EBITDA1 decreased 10.4% to $18.6 million; and
  • MFC sold the majority of its interest in Unity Medical and Surgical Hospital, as previously announced on February 26, 2020.

"First quarter 2020 started off strong before the facilities were impacted by COVID 19 in March," said Robert O. Horrar, President and CEO of Medical Facilities. "The impact has varied across the country depending on location because of the state and local restrictions on elective cases. Like many of our competitors, we started seeing a sharp decline in surgical cases in the latter half of March and into the second quarter. However, the moves we made prior to the pandemic to strengthen our balance sheet and cash flow have put MFC in a stronger position to weather this crisis."

"While our outlook for 2020 is uncertain at this time, we remain focused on our strategy to grow the company and improve financial results.  The opening of St. Luke's Surgery Center in St. Louis will be delayed slightly due to COVID 19, but we expect to start performing cases in the third quarter."

"Finally, we are extremely grateful to all our physician partners and staff as well as all first line providers and responders for their service during these trying times."

Financial Results

Financial Results from Continuing Operations

For the three months ended

March 31

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

2020

% change

2019

Facility service revenue

92,762

(0. 7%)

93,383

Consolidated operating expenses

81,727

1.5%

80,544

Income from operations

11,035

(14.1%)

12,839

Finance costs (net interest expense)

1,436

(26.3%)

1,949

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

(5,086)

(132.8%)

15,511

Share of equity income (loss) in associates

(458)

(45,900.0%)

1

Income tax recovery

(380)

(80.5%)

(1,945)

Net income (loss)

14,607

646.1%

(2,675)

Attributable to:




Owners of the Corporation

9,423

214.8%

(8,207)

Non-controlling interest

5,184

(6.3%)

5,532





Earnings per share




Basic

$0.30

215.4%

($0.26)

Diluted

$0.16

161.5%

($0.26)

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 (Loss) to EBITDA
and Adjusted EBITDA

For the three months ended

March 31

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

2020

% change

2019

Net income (loss)

14,607

646.1%

(2,675)

Income tax recovery

(380)

(80.5%)

(1,945)

Share of equity loss (income) in associates

458

45,900.0%

(1)

Finance costs (income)

(3,650)

(120.9%)

17,460

Depreciation and amortization

7,073

(10.2%)

7,878

EBITDA1

18,108

(12.6%)

20,717

Transaction costs on sale of Unity Medical and
Surgical Hospital

450

100.0%

-

Adjusted EBITDA

18,558

(10.4%)

20,717

 

Distributable Cash Flow

For the three months ended

March 31

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

2020

% change

2019

Cash available for distribution1 (C$)

8,820

67.9%

5,254

Distributions (C$)

2,177

(75.1%)

8,734

Distributions per common share (C$)

$0.070

(75.0%)

$0.281

Payout ratio1

24.6%

(85.2%)

166.3%

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 8.02% on the March 31, 2020 closing price of $3.49 per common share.

As at March 31, 2020, MFC had consolidated net working capital of $63.1million, compared to $71.5 million on December 31, 2019.

Medical Facilities' 2020 first quarter financial statements and management's discussion and analysis will be issued and filed on SEDAR at www.sedar.com on Thursday, May 14, 2020 and will also be available on Medical Facilities' website at www.medicalfacilitiescorp.ca.

Normal Course Issuer Bid ("NCIB")

During the quarter ended March 31, 2020, the Corporation did not purchase any of its common shares. As at March 31, 2020, the Corporation had 31,106,259 common shares outstanding.

Notice of Conference Call

Management of MFC will host a conference call today, May 14, 2020 at 8:30 am ET to discuss its first quarter financial results. You can join the call by dialing 647-427-7450 or 1-888-231-8191. You may be prompted for the reference number, 2892579. A live audio webcast of the call will be available at https://bit.ly/MFC2020Q1 and will be available for replay for 90 days.

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.

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.

2 Continuing operations is defined as consolidated operations excluding Unity Medical and Surgical Hospital and RRI Mishawaka Hospital, LP which were treated as discontinued operations in the financial results for the first quarter ended March 31, 2020.

SOURCE Medical Facilities Corporation

David Watson, 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