• Facility Service Revenue: Increased 2.4% to $107.2 million.

• Income from Operations: Increased by 21%.

• EBITDA: Increased 13.7% to $23.8 million.

• Total Operating Expenses: Declined 0.9% to $88.3 million.

• Salaries and Benefits: Increased 5.4%.

• Drugs and Supplies: Decreased 3.6%.

• G&A Expenses: Decreased 4.8%.

• Net Working Capital: $8.7 million at the end of the quarter.

• Cash and Cash Equivalents: $18 million at the end of the quarter.

• Corporate Credit Facility Reduction: Reduced by $5 million in the quarter.

• Share Repurchase: $3.9 million returned to shareholders through the purchase of 421,800 common shares.

• PPP Loan Forgiveness: $6.9 million confirmed as forgiven by the SBA.

• Warning! GuruFocus has detected 4 Warning Signs with MFCSF.

Release Date: August 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Medical Facilities Corp (MFCSF) reported a 2.4% increase in facility service revenue, driven by higher surgical and pain management case volumes and favorable case and payer mixes.

• The company achieved a 21% increase in income from operations and a 13.7% increase in EBITDA, reflecting strong financial performance.

• The Black Hills facility is expanding its services to include heart and vascular care, which is expected to meet increasing demand in the region.

• Medical Facilities Corp (MFCSF) made progress in reducing corporate debt by $5 million and repurchasing shares, returning $3.9 million to shareholders.

• The U.S. Small Business Administration confirmed full forgiveness of $6.9 million in Paycheck Protection Program loans, which will be recorded as government stimulus income in the third quarter.

Negative Points

• Inpatient cases were down 21.7%, which could indicate challenges in attracting or retaining patients for more intensive procedures.

• Consolidated salaries and benefits increased by 5.4%, driven by higher clinical and non-clinical salaries and market wage pressures, impacting overall expenses.

• Net working capital and cash and cash equivalents decreased, partly due to the return of capital to shareholders and debt reduction efforts.

• The Oklahoma facility underperformed compared to expectations, raising concerns about its future performance and sustainability.

• The company faces ongoing challenges in reversing denials for the remaining $5.1 million in PPP loans, which could impact financial results if not resolved.

Q & A Highlights

Q: Can you explain the strong performance at Sioux Falls and the weaker results in Oklahoma this quarter? A: (David Watson, CFO) Sioux Falls experienced higher surgical case volumes, particularly in higher acuity spine and ENT procedures, contributing to its strong performance. The case mix favored outpatient over inpatient cases. As for Oklahoma, the results were impacted by case and payer mix, and we expect this to be more of a quarterly fluctuation.