TORONTO, Aug. 6, 2024 /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, 2024. All amounts are expressed in U.S. dollars unless indicated otherwise.
Q2 2024 Highlights (Compared to Q2 2023 and excluding the divested MFC Nueterra ambulatory surgery centers)
Facility service revenue increased 2.4% to $107.2 million
Surgical case volumes increased 2.8%
Income from operations increased 21.0% to $18.9 million when excluding non-controllable, non-cash corporate level charges related to share-based compensation plans
EBITDA1 increased 13.7% to $23.8 million when excluding non-controllable, non-cash corporate level charges related to share-based compensation plans
Repaid $5.0 million on its corporate credit facility
Returned an additional $3.9 million to shareholders through the purchase of 421,800 common shares under its normal course issuer bid ("NCIB")
Subsequent to quarter end: Received forgiveness on Paycheck Protection Program ("PPP") loans of $6.9 million relating to certain facilities
"In addition to favourable case and payor mixes, our facilities benefited from higher surgical case volumes, driving increases in income from operations and EBITDA during the quarter," said Jason Redman, President and CEO of Medical Facilities. "We also continued to pay down corporate debt and repurchase shares under our NCIB. Subsequent to quarter end, the U.S. Small Business Administration finished its review pertaining to $6.9 of the $12.0 million in PPP loans outstanding as of June 30, 2024. Their review concluded with no findings, confirming full forgiveness of these particular loans. As such, we plan to record this $6.9 million amount as government stimulus income in the third quarter and reverse the corresponding liability previously recorded under government stimulus funds repayable. We will continue to seek forgiveness on the remaining PPP loans, diligently pursuing all reasonably available channels for reversing any remaining denials."
Financial Results
For the three months ended
June 30
For the six months ended
June 30
(thousands of U.S. dollars, except per share amounts and where otherwise noted)
2024
2023
% change
2024
2023
% change
Facility service revenue
107,175
109,488
(2.1 %)
215,433
218,738
(1.5 %)
Operating expenses
89,198
93,936
(5.0 %)
180,054
189,681
(5.1 %)
Income from operations
17,977
15,552
15.6 %
35,379
29,057
21.8 %
Finance costs (net interest expense)
1,234
1,565
(21.2 %)
2,521
3,201
(21.2 %)
Finance costs (changes in values of derivative instruments and gain/loss on foreign currency)
10,277
3,756
173.6 %
17,554
4,307
307.6 %
Income tax expense (recovery)
(178)
1,002
(117.8 %)
199
2,654
(92.5 %)
Net income2
6,644
9,229
(28.0 %)
15,105
18,895
(20.1 %)
Earnings (loss) per share
Basic
($0.02)
$0.13
(115.4 %)
$0.06
$0.30
(80.0 %)
Diluted
($0.02)
$0.13
(115.4 %)
$0.06
$0.30
(80.0 %)
Net income fluctuates significantly between the periods, primarily due to variations in non-cash finance costs (change in the value of exchangeable interest liability) and income taxes; these charges are incurred at the corporate level rather than at the facility level.
Reconciliation of Net Income to EBITDA1
For the three months ended
June 30
For the six months ended
June 30
(thousands of U.S. dollars, except where otherwise noted)
2024
2023
% change
2024
2023
% change
Net income
6,644
9,229
(28.0 %)
15,105
18,895
(20.1 %)
Income tax expense (recovery)
(178)
1,002
(117.8 %)
199
2,654
(92.5 %)
Finance costs
11,511
5,321
116.3 %
20,075
7,508
167.4 %
Depreciation and amortization
4,891
5,673
(13.8 %)
9,765
11,313
(13.7 %)
EBITDA
22,868
21,225
7.7 %
45,144
40,370
11.8 %
Distributable Cash Flow
For the three months ended
June 30
For the six months ended
June 30
(thousands of dollars, except per share amounts and where otherwise noted)
2024
2023
% change
2024
2023
% change
Cash available for distribution1 (C$)
8,165
6,582
24.1 %
16,949
12,170
39.3 %
Distributions (C$)
2,164
2,027
6.8 %
4,134
4,080
1.3 %
Distributions per common share (C$)
0.089
0.080
11.3 %
0.169
0.160
5.6 %
Payout ratio1
26.5 %
30.8 %
(14.0 %)
24.4 %
33.5 %
(27.2 %)
MFC declared a quarterly cash dividend of C$0.09 per common share (or C$0.36 per share on an annualized basis) to shareholders of record at the close of business on June 28, 2024, reflecting the 11.8% increase to the quarterly cash dividend announced on May 9, 2024. This was paid subsequent to the quarter end, on July 15, 2024, and represented an annualized yield of 2.85% on the June 28, 2024, closing price of C$12.65 per common share.
On June 30, 2024, MFC had consolidated net working capital of $8.7 million, compared to $19.8 million on December 31, 2023, with the decrease partly reflecting repayments of $10.0 million against the corporate credit facility since December 31, 2023, including $5.0 million during the second quarter.
MFC's financial statements and management's discussion and analysis, for the three-month and six-month periods ended June 30, 2024, will be filed on SEDAR+ at www.sedarplus.ca on Tuesday, August 6, 2024, and will also be available on Medical Facilities' website at www.medicalfacilitiescorp.ca.
Notice of Conference Call
Management of MFC will host a conference call today, August 6, 2024, at 8:30 am ET to discuss its second quarter financial results. interested parties may join the conference call by dialing 1-800-836-8184 approximately 15 minutes prior to the call to secure a line. To join the conference call without operator assistance, you may register and enter your phone number at https://emportal.ink/4ctkYR1 to receive an instant automated call back.
A live audio webcast of the call will be available at https://bit.ly/MFC2024Q2. Please connect at least 15 minutes prior to the call to allow 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, in partnership with physicians, owns a portfolio of highly rated, high-quality surgical facilities in the United States. MFC's ownership includes controlling interest in four specialty surgical hospitals located in Arkansas, Oklahoma, and South Dakota, and an ambulatory surgery center ("ASC") located in California. 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 ASC specializes 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.
1EBITDA, 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.sedarplus.ca.
2 Net income is attributable to the owners of the Corporation and the non-controlling interest holders.
