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Medical Facilities Corporation Reports 2009 First Quarter Financial Results

^{Published on 2009-05-15 04:19:23, Last Modified on 2009-05-15 04:22:20 - Market Wire}
 

 TORONTO, May 15 /CNW/ - Medical Facilities Corporation ("Medical Facilities" or "the Corporation") (TSX: DR.UN), today reported its financial results for the three-month period ended March 31, 2009. All amounts are expressed in U.S. dollars unless indicated otherwise. Q1 2009 Highlights ------------------ - Facility service revenue increased 1.8% to $48.2 million from $47.4 million in Q1 2008 - Cash available for distribution(1) totalled Cdn$9.3 million (Cdn$9.7 million in Q1 2008) and declared distributions totalled Cdn$7.8 million (Cdn$8.0 million in Q1 2008), representing a payout ratio of 84.1% for the quarter (82.1% in Q1 2008) - 78.1% payout ratio based on cash available for distribution(1) from operations before realized gains or losses on foreign currency hedges (89.3% in Q1 2008) - $8.5 million facility expansion at Black Hills Surgery Center will add common and support space and increase operating room capacity "Our Oklahoma and Dakota Plains hospitals maintained their strong momentum in the first quarter of 2009 with revenue growth of 18.6% and 15.1%, respectively. Revenues at Sioux Falls and Black Hills were down slightly from the first quarter a year ago, primarily due to shifts in case and payor mix. Completion of the facility expansion at Sioux Falls in the second half of 2009 is expected to enhance our ability to handle a larger volume of more complex cases. We recently approved a similar facility expansion at Black Hills that will increase operating room capacity. We expect the Black Hills expansion to be completed by the third quarter of 2010," said Dr. Donald Schellpfeffer, CEO of Medical Facilities. "Our ASCs in Southern California, which now represents approximately 7% of our revenue on a consolidated basis, continue to be negatively impacted by the local economic conditions." "South Dakota and Oklahoma, where our specialty surgery hospitals are located, continued to report unemployment and residential foreclosure rates significantly below the national U.S. average. We believe South Dakota and Oklahoma are not as affected by the continuing weak economic conditions as other states or regions, such as Orange County in southern California, where unemployment and residential foreclosure rates are amongst the highest in the United States," continued Dr. Donald Schellpfeffer. "Looking ahead, we will continue to focus on optimizing the performance and patient care at all our centers through a combination of strategic initiatives, including: facility expansions, physician recruitment, enhanced case and payor mix, and where applicable, improved cost controls. We remain committed to providing our patients with excellent quality care and our unitholders with reliable income, growth and long-term value creation." Financial Results ----------------- Three months ended March 31, 2009 For the three months ended March 31, 2009, Medical Facilities generated cash available for distribution(1) ("CAFD") of Cdn$9.3 million or Cdn$0.327 per IPS unit, and declared distributions (comprised of interest on subordinated notes and dividends on common shares) of Cdn$7.8 million or Cdn$0.275 per IPS unit, representing a payout ratio of 84.1% for the quarter. Facility service revenue ("revenue") for the first quarter of 2009 increased 1.8% to $48.2 million compared to revenue of $47.4 million in the first quarter of 2008. Increased revenue in the quarter resulted primarily from same center growth at Dakota Plains Surgical Center and Oklahoma Spine Hospital totalling $2.6 million. Consolidated expenses, including salaries and benefits, drugs and supplies and general and administrative costs ("consolidated expenses") for the first quarter of 2009 totalled $29.6 million or 61.3% of revenue, compared to consolidated expenses of $28.3 million or 59.8% of revenue in the first quarter a year ago. Increased consolidated expenses resulted primarily from weaker than expected performance at Medical Facilities' two California ASCs, and changes in case mixes at certain Medical Facilities' Centers, with a higher proportion of cases requiring more materials and supplies. Consolidated operating income, before depreciation and amortization, interest expense, loss on foreign currency translation and minority interest, ("consolidated operating income") in the first quarter of 2009 decreased 1.9% to $18.7 million or 38.7% of revenue, compared to operating income of $19.1 million or 40.2% of revenue in the first quarter a year ago. The decrease in operating income in the quarter was primarily due to the weaker performance of the California ASCs and increase in consolidated expenses. Operating income for Medical Facilities' specialty surgical hospitals increased 4.3% to $18.1 million in the period, largely attributable to the improved performance at Oklahoma Spine Hospital. Consolidated net income for the first quarter of 2009 totalled $1.7 million or $0.053 per IPS unit (basic) and $0.050 per IPS unit (fully diluted), compared to net income of $3.2 million or $0.100 per IPS unit (basic and fully diluted) in the first quarter of 2008. As at March 31, 2009, the Corporation had consolidated net working capital of $51.0 million including cash and cash equivalents of $25.5 million and patient accounts receivable were $33.2 million, compared to working capital of $52.4 million, including cash and cash equivalents of $25.7 million and accounts receivable of $38.5 million as at December 31, 2008. Long-term debt at the Centers' level, including the current portion, was $39.0 million as at March 31, 2009, compared to $37.4 million as at December 31, 2008. Normal Course Issuer Bids ------------------------- On April 15, 2008, the Corporation received regulatory approval for a normal course issuer bid ("NCIB") for IPS units of Medical Facilities during the period from April 25, 2008 to April 24, 2009. Over this period, 721,500 IPS units were repurchased and cancelled at an average cost of Cdn$7.29 per unit for a total consideration of Cdn$5.3 million. On April 23, 2009, Medical Facilities received regulatory approval for another NCIB under which the Corporation may purchase up to 1,420,049 of its IPS units during the period from April 25, 2009 to April 24, 2010. Through May 11, 2009, 23,300 IPS units were repurchased and cancelled at an average cost of Cdn$8.67 per unit for a total consideration of Cdn$0.2 million. As of May 11, 2009, the Corporation had 28,353,875 units outstanding. On January 5, 2009, Medical Facilities announced a NCIB for up to Cdn$2.15 million aggregate principal amount of its outstanding 7.50% convertible secured debentures. Under the terms of the NCIB, the Company may purchase the debentures at prevailing market prices during the period from January 7, 2009 to January 6, 2010. All Debentures purchased by Medical Facilities under this normal NCIB will be cancelled. As of May 11, 2009, the Corporation had not made any purchases under this NCIB. Medical Facilities' complete 2009 first quarter financial statements and management's discussion & analysis will be issued and filed on SEDAR on Friday, May 15, 2009 and will be available the same day via Medical Facilities' website at [ www.medicalfacilitiescorp.ca ]. Notice of Conference Call and Webcast ------------------------------------- Management of Medical Facilities will host a conference call today, Friday, May 15, 2009 at 9:00 am (ET) to discuss its 2009 first quarter financial results. You can join the call by dialling 1-800-733-7560 or 416-644-3414. A live audio webcast of the call will also be available at [ www.medicalfacilitiescorp.ca ]. Webcast attendees are welcome to listen to the conference in real-time or on-demand at their convenience. A taped replay of the conference call will be available until Friday, May 22, 2009 at midnight by calling 1-877-289-8525 or 416-640-1917, reference number 21304383 followed by the number sign. To view Medical Facilities Q1 2009 financial statements, please click here: [ http://files.newswire.ca/476/MedicalFacilities.pdf ] About Medical Facilities ------------------------ Medical Facilities owns controlling interests in four specialty surgical hospitals, located in South Dakota and Oklahoma, as well as two ambulatory surgery centers in California. The specialty hospitals perform scheduled surgical, imaging and diagnostic procedures 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 holders of its IPS units, of which a portion is interest on subordinated debt and a portion is dividend. 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) Cash available for distribution is a non-GAAP measure and is not intended to be representative of cash flow or results of operations determined in accordance with GAAP. Accordingly, Medical Facilities provides a reconciliation of cash available for distributions to reported cash flow from operations in the Corporation's MD&A. Investors are cautioned that cash available for distribution, as calculated by Medical Facilities, is unlikely to be comparable to similar measures used by other issuers. %SEDAR: 00020386E 

For further information: Michael Salter, Chief Financial Officer, Medical Facilities Corporation, (416) 848-7980 or 1-877-402-7162, [ Investors@medicalfc.com ]; Adriana Braczek or Bruce Wigle, Investor Relations, The Equicom Group Inc., (416) 815-0700 or 1-800-385-5451 ext. 240 or 228, [ abraczek@equicomgroup.com ] or [ bwigle@equicomgroup.com ]