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Medical Facilities Corporation Reports Second Quarter 2020 Financial Results

August 13, 2020

TORONTO, Aug. 13, 2020 /CNW/ - Medical Facilities Corporation ("Medical Facilities," "MFC," or the "Corporation") (TSX: DR), reported its financial results today for the three-month and six-month periods ended June 30, 2020. All amounts are expressed in U.S. dollars unless indicated otherwise.

Q2 2020 Summary
(For continuing operations1 compared to Q2 2019)

  • Total revenue and other income, which includes $21.1 million of government stimulus income received by the surgical hospitals and ambulatory surgery centers, decreased 5.8% to $88.8 million, largely as a result of reductions in elective surgeries due to the COVID-19 pandemic;
  • Facility service revenue decreased 28.2% to $67.7 million;
  • Income from operations increased 37.7% to $17.6 million;
  • EBITDA2 increased 19.9% to $24.6 million; and
  • On June 30, 2020, the Corporation sold the real estate assets underlying Unity Medical and Surgical Hospital for net proceeds of $24.7 million;

"While our case volumes were impacted heavily by COVID-19 in the month of April, by mid-May volumes began to rebound as restrictions were lifted on elective surgeries," said Robert O. Horrar, President and CEO of Medical Facilities. "The recovery was more pronounced in June with volumes returning close to prior year levels. Our physician partners, staff and first line providers have all played an incredible role in helping ensure that our facilities were able to continue providing the same high standard of care for which they are known."

"COVID 19 has had an unprecedented impact on our society and in particular, our healthcare system. While our financial results for the first half of the year have been impacted by the pandemic, the close of our real estate transaction at the end of June strengthened our balance sheet. And, in addition to the opening of St. Luke's Surgery Center of Chesterfield this month, we remain focused on growth opportunities."

Financial Results

All of MFC's facilities were impacted by the COVID-19 pandemic during the second quarter as elective cases were restricted, either voluntarily or by government mandate, including the temporary closure of three of the MFC Nueterra ambulatory surgery centers. The negative impact of these restrictions and expenses related to COVID-19 were partly offset by the recognition of government stimulus income of $21.1 million received by the facilities during the quarter.

Financial Results from
Continuing Operations

For the three months ended

For the six months ended

June 30

June 30

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

2020

% change

2019

2020

% change

2019

Facility service revenue

67,659

(28.2%)

94,230

160,421

(14.5%)

187,613

Government stimulus income

21,145

100.0%

-

21,145

100.0%

-

Total revenue and other income

88,804

(5.8%)

94,230

181,566

(3.2%)

187,613

Consolidated operating expenses

71,218

(12.6%)

81,461

152,945

(5.6%)

162,005

Income from operations

17,586

37.7%

12,769

28,621

11.8%

25,608

Finance costs (net interest expense)

915

(57.4%)

2,146

2,351

(42.6%)

4,095

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

5,535

128.9%

(19,152)

449

112.3%

(3,641)

Share of equity loss in associates

476

366.7%

102

934

824.8%

101

Income tax expense

3,283

(51.4%)

6,752

2,903

(39.6%)

4,807

Net income

7,377

(67.8%)

22,921

21,984

8.6%

20,246

Attributable to:







Owners of the Corporation

241

(98.7%)

18,555

9,664

(6.6%)

10,348

Non-controlling interest

7,136

63.4%

4,366

12,320

24.5%

9,898








Earnings per share







Basic

$0.01

(98.3%)

$0.60

$0.31

(6.1%)

$0.33

Diluted

$0.01

(92.9%)

$0.14

$0.30

50.0%

$0.20

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 to
EBITDA and Adjusted EBITDA

For the three months ended

For the six months ended

June 30

June 30

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

2020

% change

2019

2020

 % change

2019

Net income

7,377

(67.8%)

22,921

21,984

8.6%

20,246

Income tax expense

3,283

(51.4%)

6,752

2,903

(39.6%)

4,807

Share of equity loss in associates

476

366.7%

102

934

824.8%

101

Finance costs (income)

6,450

137.9%

(17,006)

2,800

516.7%

454

Depreciation and amortization

7,017

(9.5%)

7,757

14,090

(9.9%)

15,635

EBITDA

24,603

19.9%

20,526

42,711

3.6%

41,243

Transaction costs on sale of Unity
Medical and Surgical Hospital

-

-

-

450

100.0%

-

Adjusted EBITDA2

24,603

19.9%

20,526

43,161

4.7%

41,243

 

Distributable Cash Flow

For the three months ended

For the six months ended

June 30

June 30

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

2020

% change

2019

2020

 % change

2019

Cash available for distribution2 (C$)

8,225

68.8%

4,872

17,056

68.4%

10,127

Distributions (C$)

2,178

(75.1%)

8,739

4,355

(75.1%)

17,473

Distributions per common share (C$)

0.070

(75.1%)

0.281

0.140

(75.1%)

0.562

Payout ratio2

26.5%

(85.2%)

179.0%

25.5%

(85.2%)

172.4%

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 6.45% on the June 30, 2020 closing price of $4.34 per common share.

As at June 30, 2020, MFC had consolidated net working capital of $74.3 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 six-month periods ended June 30, 2020, will be filed on SEDAR at www.sedar.com on Thursday, August 13, 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 six-month periods ended June 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, August 13, 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 https://bit.ly/MFC2020Q2. 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 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.

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