Medical Facilities Corporation Reports 2008 Second Quarter Financial Results



    TORONTO, Aug. 13 /CNW/ - Medical Facilities Corporation ("Medical
Facilities" or the "Company") (TSX: DR.UN), today reported its financial
results for the three and six-month periods ended June 30, 2008. All amounts
are expressed in U.S. dollars unless indicated otherwise.

    Q2 2008 HIGHLIGHTS

    
    -   Facility service revenue increased 15.0% to $48.4 million from
        $42.0 million in Q2 2007
    -   Operating income increased 10.0% to $18.9 million from $17.1 million
        in Q2 2007
    -   Cash available for distribution(1) totalled C$9.9 million and
        declared distributions totalled C$8.0 million, representing a payout
        ratio of 80.9% (on an income participating security "IPS" unit basis)
        for the quarter (Q2 2007: 82.8%)
    -   Payout ratio based on cash available for distribution(1) from
        operations (before realized gains on foreign currency hedges) was
        87.3% (Q2 2007: 89.3%)
    -   Completed C$43.0 million convertible debenture offering, proceeds of
        which were used to repay the Bridge Acquisition Facility and
        replenish the Company's treasury
    

    "Our strong financial results in the quarter were driven primarily by
revenue and operating income growth at both Oklahoma Spine Hospital and Dakota
Plains Surgical Center. Oklahoma Spine and Dakota Plains contributed 42
percent of consolidated revenue growth and comprised 74 percent of
consolidated operating income growth," said Dr. Donald Schellpfeffer, CEO of
Medical Facilities. "We are pleased with the improved performance at Oklahoma
Spine and remain committed to driving growth at our other centers in South
Dakota and California through physician recruitment, marketing and facility
expansion initiatives. We also remain focused on acquisition opportunities."

    Financial Results

    For the three months ended June 30, 2008, Medical Facilities generated
cash available for distribution(1) ("CAFD") of C$9.9 million or C$0.340 per
IPS unit, and declared distributions (comprised of interest on subordinated
notes and dividends on common shares) of C$8.0 million or C$0.275 per IPS
unit, representing a payout ratio of 80.9% for the quarter. Medical Facilities
has entered into foreign exchange forward contracts covering approximately
three years of distributions at the current annual rate of C$1.10 per IPS
unit.
    Facility service revenue ("revenue") for the second quarter of 2008
increased 15.0% to $48.4 million compared to revenue of $42.0 million in the
second quarter of 2007. Increased revenue in the quarter resulted primarily
from: the acquisitions of Barranca Surgery Center and the Surgery Center of
Newport Coast, which combined, accounted for $4.1 million of new revenue;
changes in case and payor mix at the existing Medical Facilities' Centers;
and, general fee increases.
    Consolidated expenses, including salaries and benefits, drugs and
supplies and general and administrative costs ("consolidated expenses") for
the second quarter of 2008 totalled $29.5 million or 61.0% of revenue,
compared to consolidated expenses of $24.9 million or 59.2% of revenue in the
second quarter a year ago. Increased consolidated expenses resulted primarily
from: higher drug and supply costs; annual wage and salary adjustments, as a
result of new employees gained from Barranca Surgery Center and the Surgery
Center of Newport Coast, as well as additional temporary staff hired at Sioux
Falls Surgical Center; and, higher general, administrative and other operating
expenses due to the new ambulatory surgery center acquisitions.
    Operating income (before depreciation and amortization, interest expense,
loss on foreign currency translation and minority interest) in the second
quarter of 2008 increased 10.0% to $18.9 million or 39.0% of revenue, compared
to operating income of $17.1 million or 40.8% of revenue in the second quarter
a year ago. Increased operating income reflects improved performance at Dakota
Plains Surgical Center and Oklahoma Spine Hospital, as well as the
acquisitions of Barranca Surgery Center and the Surgery Center of Newport
Coast.
    Net loss for the second quarter of 2008 totalled $0.6 million or $0.002
per IPS unit (basic and fully diluted), compared to a net loss of $7.5 million
or $(0.285) per IPS unit (basic and fully diluted) in the second quarter of
2007.
    For the six months ended June 30, 2008, revenue increased 15.1% to 
$95.7 million, compared to revenue of $83.2 million in the corresponding
period a year ago. Consolidated expenses for the six months ended June 30,
2008 totalled $57.8 million or 60.4% of revenue, compared to consolidated
expenses of $48.9 million or 58.8% of revenue in the first six months of 2007.
Operating income increased 10.5% to $37.9 million or 39.6% of revenue,
compared to operating income of $34.3 million or 41.2% of revenue in the same
period a year ago. Net earnings for the first six months of 2008 totalled 
$2.6 million or $0.103 per IPS unit (basic and fully diluted), compared to a
net loss of $8.8 million or $(0.34) per IPS unit (basic and fully diluted) in
the same period a year ago.
    As at June 30, 2008, Medical Facilities had consolidated net working
capital of $49.1 million, including cash and cash equivalents of $29.8 million
and patient accounts receivables of $32.5 million, compared to working capital
of $37.0 million, including cash and cash equivalents of $14.7 million and
patient accounts receivables of $32.3 million as at December 31, 2007.
Long-term debt at the Centers' level, including the current portion, was 
$30.9 million as at June 30, 2008, compared to $24.4 million as at 
December 31, 2007.
    Medical Facilities' financial statements and Management Discussion &
Analysis ("MD&A") for the three and six-month periods ended June 30, 2008,
will be issued and filed on SEDAR on Wednesday, August 13, 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,
Wednesday, August 13, 2008 at 10:00 am (ET) to discuss its 2008 second quarter
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 their convenience. A taped replay of
the conference call will be available until Wednesday, August 20, 2008 at
midnight at 1-877-289-8525 or 416-640-1917, reference number 21278223 followed
by the number sign.

    To view Medical Facilities Corporation's second quarter financial
statements, please click here: http://files.newswire.ca/736/MedicalQ308.pdf

    About Medical Facilities

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

For further information: Michael Salter, Chief Financial Officer,
Medical Facilities Corp., (416) 848-7380 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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