Medical Facilities Q1 2016 financial statements and notes (CNW Group/Medical Facilities Corporation)
TORONTO, May 12, 2016 /CNW/ – Medical Facilities Corporation (“Medical Facilities” or the “Company”) (TSX: DR), announced today its financial and operating results for the three months ended March 31, 2016. All amounts are expressed in U.S. dollars unless indicated otherwise.
First Quarter 2016 Summary
Consolidated facility service revenue from continuing operations of $75.9 million, up 5.1% as compared with $72.2 million in Q1 2015
Consolidated income from continuing operations of $14.8 million, down 8.4% as compared with $16.2 million in Q1 2015
Cash available for distribution1 of Cdn$11.9 million, up 6.5% as compared with Cdn$11.2 million in Q1 2015
Payout ratio1 of 73.2% as compared with 78.5% in Q1 2015
“We experienced continued revenue growth in the quarter, driven primarily by higher case volumes recorded by all our specialty surgical hospitals, as well as higher pain management revenues”, said Seymour Temkin, interim CEO of Medical Facilities during Q1 2016. “While case and payor mix changes combined with higher general and administrative costs had a negative impact on operating income in the quarter, cash available for distribution and payout ratio were more favourable due to the Company’s exposure to the U.S./Canadian dollar exchange rate”.
“From our strong financial position, we look forward to an exciting future under the leadership of our newly-appointed CEO, Mr. Britt Reynolds“, Mr. Temkin added. “Also, I am pleased to report that we have initiatives underway that should enhance our business model and revenue: Black Hills Urgent Care, a division of Black Hills Surgical Hospital, is expanding its footprint by adding a third location in Spearfish, South Dakota. As well, Sioux Falls Specialty Hospital has announced plans to purchase a CT scanner to enhance its offering of imaging services, and is increasing the size of some of its operating rooms to accommodate larger and more complex surgical cases”.
“We continue to investigate accretive acquisition opportunities that will provide reliable income and long-term value to our shareholders, to whom we have delivered 146 consecutive dividends since inception”, concluded Mr. Temkin.
1 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.
Financial and Operating Results Three months ended March 31, 2016 The Company generated cash available for distribution (“CAFD”) of Cdn$11.9 million, or Cdn$0.384 per common share, and declared dividends of Cdn$8.7 million, or Cdn$0.281 per common share, representing a payout ratio of 73.2% compared to 78.5% a year earlier. In U.S.-dollar terms, CAFD of US$8.7 million decreased by US$0.3 million primarily due to weaker cash flows from the Centers partially offset by a favourable variance from foreign currency losses on foreign exchange forward contracts in the prior year.
Consolidated facility service revenue from continuing operations (“revenue”) was $75.9 million, an increase of $3.7 million or 5.1% from $72.2 million a year earlier, which was primarily attributable to the increased revenues from surgical cases and the net contribution to revenue from Integrated Medical Delivery, LLC, which were partially offset by unfavourable changes in payor and case mix.
Consolidated operating expenses from continuing operations, including salaries and benefits, drugs and supplies, general and administrative costs, depreciation of property and equipment, and amortization of other intangibles, (“consolidated expenses”) totalled$61.1 million, or 80.5% of revenue, compared with consolidated expenses of $56.1 million, or 77.6% of revenue, a year ago. The increase in consolidated expenses was primarily attributable to increased activity at the Centers, annual salary increases and costs associated with the orthopedic service line management agreement at Sioux Falls Specialty Hospital.
Consolidated income from continuing operations was $14.8 million, or 19.5% of revenue, a $1.4 million or 8.4% decrease from consolidated income from continuing operations of $16.2 million, or 22.4% of revenue for the same period a year ago, reflecting an increase in consolidated expenses partially offset by growth in revenue.
Total consolidated income from continuing operations was $0.7 million, or a loss of $0.19 per share (basic and fully diluted) compared with total consolidated income from continuing operations of $17.8 million, or $0.34 per share (basic) and $0.04 per share (fully diluted), for the same period in 2015. The decline of $17.1 million or 95.9% in total consolidated income from continuing operations was primarily due to the impact of the increases in the values of exchangeable interest liability and convertible debentures, as well as weaker performance of the Centers, which were partially offset by a decline in income taxes and gain on foreign currency.
As at March 31, 2016, the Company had consolidated net working capital of $82.9 million, including cash and cash equivalents and short-term investments of $73.8 million and accounts receivable of $40.1 million, compared with net working capital of $85.7 million, including cash and cash equivalents and short-term investments of $70.9 million and accounts receivable of $48.8 million, as at December 31, 2015. Long-term debt at the Centers’ level, including the current portion, was $39.0 million as at March 31, 2016 compared with $35.4 million as at December 31, 2015.
Medical Facilities’ complete first quarter 2016 financial statements and management’s discussion and analysis will be issued and filed on SEDAR at www.sedar.com on Thursday, May 12, 2016 and will be available on the same day on Medical Facilities’ website atwww.medicalfacilitiescorp.ca.
Normal Course Issuer Bid (“NCIB”) The Company repurchases its common shares in the open market. By repurchasing and cancelling its common shares, Medical Facilities reduces the total amount of dividends payable, resulting in cash savings for the Company. The remaining shareholders benefit from the NCIB as the distributable cash per share increases. During the three months ended March 31, 2016, the Company purchased 67,500 of its common shares at an average price of Cdn$13.55 per share, for a total consideration of Cdn$0.9 million.
As at March 31, 2016, the Company had 31,045,945 common shares outstanding.
Notice of Conference Call Management of Medical Facilities will host a conference call today, Thursday, May 12, 2016 at 8:30 am ET to discuss its first quarter 2016 financial results. You can join the call by dialing 647.427.7450 or 1.888.231.8191. A taped replay of the conference call will be available until May 19, 2016 by calling 416.849.0833 or 1.855.859.2056, reference number 90744497.
Annual and Special Meeting of Shareholders Medical Facilities will webcast its Annual and Special Meeting of Shareholders on Thursday, May 12, 2016 at 2:00 p.m. ET. The webcast will be available at http://bit.ly/1VE1dvr. Please connect at least 15 minutes prior to the start of the meeting to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived on the company’s website following the meeting date.
Medical Facilities owns controlling interests in four specialty surgical hospitals located in Arkansas, Oklahoma and South Dakota, as well as an ambulatory surgery center in California. The specialty hospitals perform scheduled surgical, imaging, diagnostic and other procedures, including urgent and primary care, and derive their revenue from the fees charged for the use of their facilities. The ambulatory surgery center specializes in outpatient surgical procedures, with patient stays of less than 24 hours. In addition, Medical Facilities owns a controlling interest in a diversified healthcare service company located in Oklahoma City that provides third-party business solutions to healthcare entities such as physician practices, facilities, and insurance companies. Medical Facilities is structured so that a majority of its free cash flow from operations is distributed to the holders of its common shares in the form of dividends. 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..
For further information: Michael Salter, Chief Financial Officer, Medical Facilities Corporation, 416.848.7380 or 1.877.402.7162, firstname.lastname@example.org; Craig MacPhail, Investor Relations, NATIONAL Equicom, 416.586.1938, email@example.com
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