Medical Facilities Corporation Reports 2007 Fourth Quarter and Year End Financial Results



    TORONTO, March 24 /CNW/ - Medical Facilities Corporation ("Medical
Facilities") (TSX:DR.UN), today reported its financial results for the three
and twelve-month periods ended December 31, 2007. All amounts are expressed in
U.S. dollars unless indicated otherwise.

    2007 HIGHLIGHTS

    
    -  Facility service revenues increased 13.6% to $168.8 million from
       $148.5 million for the year ended December 31, 2006
    -  Operating income increased 12.3% to $67.5 million from $60.1 million
       in 2006
    -  Cash available for distribution(1) totalled C$36.8 million and
       declared distributions totalled C$31.1 million, representing a payout
       ratio of 84.6% in 2007
    -  Payout ratio based on cash available for distribution(1) from
       operations (excluding realized gains on foreign currency hedges) was
       91.9%
    -  Acquisition of a 51% interest in Barranca Surgery Center, LLC and a
       51% interest in the Surgery Center of Newport Coast, LLC (closed
       January 7, 2008), two ambulatory surgery centers ("ASCs") located in
       Orange County, California
    

    "We are pleased to announce another solid year of financial performance
with year-over-year facility service revenues growth of 13.6%, and operating
margins of 40%," said Dr. Donald Schellpfeffer, CEO of Medical Facilities.
"Revenues grew at all our specialty surgical hospitals, primarily due to a
more favorable case mix, increased case volumes and general fee increases."
    "During 2007, we advanced our growth strategy through the acquisition of
Barranca Surgery Center, an ASC located in Irvine, California. This
transaction, followed subsequently by our January 2008 purchase of Newport
Coast in Newport Beach, California, marks our entrance into the state of
California and the ASC market. Both acquisitions were immediately accretive to
Medical Facilities' cash available for distribution per IPS. We have also
remained focused on initiatives to enhance organic growth and drive capacity
utilization at our facilities. We added two operating rooms at Sioux Falls
Surgical Center and are now proceeding with an US$11 million facility
expansion that will increase the number of overnight stay beds to 22 from the
current 13."
    "Looking ahead, we remain committed to further capitalizing on the strong
growth trends in the U.S. healthcare services market through strategic
acquisitions of specialty surgical hospitals and ASCs and remain focused on
providing a best-in-class experience for our patients, a more productive work
environment for physicians and staff, and competitive rates and streamlined
business processes for our payors."

    Financial Results

    For the three months ended December 31, 2007, Medical Facilities
generated cash available for distribution(1) ("CAFD") of C$9.4 million or
C$0.325 per IPS unit, and declared distributions (comprised of interest on
subordinated notes and dividends on common shares) of C$7.9 million or C$0.275
per IPS unit, representing a payout ratio of 84.6% for the quarter. For the
twelve months ended December 31, 2007, Medical Facilities generated CAFD(1) of
C$36.8 million or C$1.301 per IPS unit, and declared distributions of C$31.1
million or C$1.100 per IPS unit, representing a payout ratio of 84.6% for the
period. US$94.3 million of Medical Facilities' expected future U.S. dollar
cash flows available for distribution are hedged and will be converted at
weighted average exchange rates of C$1.1747, C$1.1092 and C$1.0468 in each of
the next three years.
    Facility service revenues ("revenues") for the fourth quarter of 2007
increased 11.5% to $46.8 million compared to revenues of $42.0 million in the
fourth quarter of 2006. Revenues increased during the quarter due to a greater
case volume at Sioux Falls Surgical Center and Dakota Plains Surgical Center
and a more favourable case mix at all four specialty surgical hospitals.
Revenue growth at the four hospitals was moderated by a higher provision for
contractual allowance due to a less favourable payor mix.
    Consolidated expenses, including salaries and benefits, drugs and
supplies and general and administrative costs ("consolidated expenses") for
the fourth quarter of 2007 totalled $28.8 million or 61.5% of revenues,
compared to consolidated expenses of $24.7 million or 58.8% of revenues in the
fourth quarter a year ago. Increased consolidated expenses resulted primarily
from an increased number of cases requiring higher drug and supply costs,
annual wage and salary adjustments and higher employee health insurance
premiums.
    Operating income (before depreciation and amortization, interest expense,
loss on foreign currency translation and minority interest) in the fourth
quarter of 2007 increased 4.0% to $18.0 million or 38.5% of revenues, compared
to operating income of $17.3 million or 41.2% of revenues in the fourth
quarter a year ago. Increased operating income reflects improved performance
at Sioux Falls Surgical Center and Dakota Plains Surgical Center, as well as
the acquisition of Barranca Surgery Center.
    Net income for the fourth quarter of 2007 totalled $0.4 million or $0.002
per IPS unit (basic and fully diluted), compared to a net income of $5.4
million or $0.173 per IPS unit (basic and fully diluted) in the fourth quarter
of 2006. The decrease in net income in the fourth quarter of 2007 resulted
primarily from increased foreign exchange loss, increased provision for
current and future income taxes and increased interest expense compared to the
fourth quarter a year ago.
    For the twelve months ended December 31, 2007, revenues increased 13.6%
to $168.7 million, compared to revenues of $148.5 million in the corresponding
period a year ago. Consolidated expenses (including salaries and benefits,
drugs and supplies and general and administrative costs) for the twelve months
ended December 31, 2007 totalled $101.1 million or 60.0% of revenues, compared
to consolidated expenses of $88.2 million or 59.4% of revenues in the first
twelve months of 2006. Operating income (before depreciation and amortization,
interest expense, loss on foreign currency translation and minority interest)
increased 12.3% to $67.5 million or 40.0% of revenues, compared to operating
income of $60.1 million or 40.5% of revenues in the same period a year ago.
Net loss totalled $17.6 million or $0.643 per IPS unit (basic and fully
diluted), compared to a net loss of $2.0 million or $0.081 per IPS unit (basic
and fully diluted) in the same period a year ago.
    As at December 31, 2007, Medical Facilities had working capital of $37.0
million, including cash and cash equivalents of $14.7 million, compared to
working capital of $38.6 million, including cash and cash equivalents of $15.4
million as at December 31, 2006. Long-term debt at the Centers' level,
including the current portion, was $24.4 million as at December 31, 2007,
compared to $24.6 million as at December 31, 2006.
    Medical Facilities' 2007 financial statements for the year ended December
31, 2007 and Management's Discussion & Analysis ("MD&A"), for the three and
twelve-month periods then ended, will be issued and filed on SEDAR on Monday,
March 24, 2008 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,
Monday, March 24, 2008 at 10:00 am (ET) to discuss its 2007 fourth quarter and
year end financial results. A live audio webcast of the call will be available
at www.medicalfacilitiescorp.ca. Webcast attendees are welcome to listen to
the conference in real-time or on-demand at your convenience. A taped replay
of the conference call will be available until Monday, March 31, 2008 at
midnight at 1-877-289-8525 or 416-640-1917, reference number 21262576 followed
by the number sign.

    About Medical Facilities Corporation

    Medical Facilities Corporation owns at least 51% interests in four
specialty surgical hospitals, located in South Dakota and Oklahoma, as well as
51% interest in 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 Income Participating Securities, 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:

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


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