TORONTO, March 22 /CNW/ - Medical Facilities Corporation ("Medical Facilities" or "the Corporation") (TSX: DR.UN), today reported its financial results for the three and twelve-month periods ended December 31, 2009. All amounts are expressed in U.S. dollars unless indicated otherwise.
- Facility service revenue increased to $207.4 million from
$199.4 million in 2008
- Operating income was $77.0 million compared to $80.7 million in 2008
- Payout ratio after realized gains or losses on foreign currency
hedges of 82.6% (79.3% in 2008)
- Payout ratio based on cash available for distribution(1) from
operations before realized losses on foreign currency hedges of 81.0%
(82.7% in 2008)
- Repurchased and cancelled 285,500 IPS units at an average cost of
C$7.77 per IPS unit under the normal course issuer bids, resulting in
a total distribution saving of C$0.3 million for the Corporation
- Completed facility expansion projects at Sioux Falls Surgical
Hospital, Dakota Plains Surgical Center and Oklahoma Spine Hospital,
increasing the number of overnight stay rooms by a total of 31
- Initiated an $8.4 million project at Black Hills Surgical Hospital to
expand common and support areas and increase operating room capacity
- Commenced operations of a new imaging center including an Open
Upright MRI at Sioux Falls Surgical Hospital
"2009 marked a year of considerable organic growth for Medical Facilities," said Dr. Donald Schellpfeffer, CEO of Medical Facilities. "We completed facility expansions at our Sioux Falls, Dakota Plains and Oklahoma Spine hospitals and initiated an expansion at Black Hills. On a combined basis, we added 31 overnight stay rooms. With this extra capacity, we will be better able to manage the expected increase in patient volumes in the coming years, driven by an aging U.S. population and increasing spending on healthcare. We are pleased to report that we have already seen significant revenue improvement at Sioux Falls due to the expansion, which contributed to the consolidated revenue growth in the year."
"Although we reported increased consolidated revenue for the 2009 fourth quarter and fiscal year, we continued to be somewhat impacted by the weak U.S. economic environment," added Dr. Schellpfeffer. "In particular, we will continue to try to mitigate the impact of the economy on our California Centers."
"We enter 2010 with a strong financial position. We have taken a conservative approach to growth having recently completed expansions at three of our hospitals and will complete an expansion at the fourth facility in 2010. We remain committed to optimizing the performance and patient care at all our centers through utilization of our facility expansions, physician recruitment, enhanced case and payor mix, and where applicable, improved cost controls, in order to continue providing reliable income and long-term value growth to our unitholders. We continue to monitor the market for both specialty hospitals and ASCs that present accretive opportunities for MFC, although the market is presently restricted by the regulatory uncertainty regarding physician ownership of hospitals and healthcare reform in general."
Three months ended December 31, 2009
For the three months ended December 31, 2009, Medical Facilities generated cash available for distribution(1) ("CAFD") of Cdn$10.4 million or C$0.366 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 75.1% for the quarter.
Consolidated facility service revenue ("revenue") for the fourth quarter of 2009 increased 5.0% to $58.0 million compared to revenue of $55.3 million in the fourth quarter of 2008. Increased revenue in the quarter resulted primarily from same center growth at Oklahoma Spine Hospital ("OSH"), Sioux Falls Surgical Hospital ("SFSH") and The Surgery Center of Newport Coast ("Newport Coast"). Revenue growth was moderated by an increase in lower revenue generating Medicare and Medicaid cases, as well as a shift in case mix at Dakota Plains Surgical Center ("DPSC"), Black Hills Surgical Hospital ("BHSH") and Barranca Surgery Center ("Barranca").
Consolidated operating expenses, including salaries and benefits, drugs and supplies and general and administrative costs ("consolidated expenses") for the fourth quarter of 2009 totalled $36.5 million or 62.8% of revenue, compared to consolidated expenses of $31.7 million or 57.4% of revenue in the fourth quarter a year ago. Increased consolidated expenses resulted primarily from
(i) higher drugs and supply costs, due to shifts in case and payor mix
(Medicare and Medicaid);
(ii) annual wage and salary adjustments;
(iii) additional staff hired at SFSH, OSH and DPSC due to the facility
(iv) higher public company expenses.
Consolidated operating income, before depreciation and amortization, interest expense, loss on foreign currency translation and minority interest), ("consolidated operating income") in the fourth quarter of 2009 was $21.6 million or 37.2% of revenue, compared to income of $23.6 million or 42.6% of revenue in the fourth quarter a year ago.
Consolidated net loss for the fourth quarter of 2009 totalled $0.2 million or a loss of $0.009 per IPS unit (basic and fully diluted), compared to net income of $12.9 million or $0.425 per IPS unit (basic) and $0.359 per IPS unit (fully diluted) in the fourth quarter of 2008.
Twelve months ended December 31, 2009
For the year ended December 31, 2009, Medical Facilities generated CAFD(1) of Cdn$37.8 million or C$1.332 per IPS unit, and declared distributions of Cdn$31.2 million or Cdn$1.100 per IPS unit, representing a payout ratio of 82.6% for the period.
Revenue for the year ended December 31, 2009, increased 4.0% to $207.4 million, compared to revenue of $199.4 million in 2008. Increased revenue in 2009 resulted primarily from same center growth at OSH and SFSH, which was slightly offset by lower surgical case volume and changes in case mix at BHSH, DPSC and the California Centers.
Consolidated operating expenses for the year ended December 31, 2009 totaled $130.4 million or 62.9% of revenue compared to consolidated expenses of $118.7 million or 59.5% of revenue for the year ended December 31, 2008. Increased consolidated expenses resulted primarily from:
(i) increased salaries, from hiring additional clinical staff at SFSH
because of a higher number of inpatient beds and the new Open
Upright MRI facility; hiring of additional personnel at DPSC as a
result of the expansion; hiring of additional personnel at the
corporate office; annual salary and wage adjustments; and,
increases in employee health insurance costs;
(ii) higher drug and supply costs, mainly due to the changes in the case
mix requiring higher cost of implants and supplies; and,
(iii) increased general, administrative and other operating expenses both
at the Centers and at public company.
Consolidated operating income was $77.0 million or 37.1% of revenue for the twelve-month period ended December 31, 2009, compared to operating income of $80.7 million or 40.5% of revenue in the same period in the prior year.
Consolidated net loss for fiscal 2009 totalled $0.7 million or a loss of $0.027 per IPS unit (basic and fully diluted), compared to a net income of $19.6 million or $0.683 per IPS unit (basic) and $0.637 per IPS unit (fully diluted) in 2008.
As at December 31, 2009, the Corporation had consolidated net working capital of $46.4 million including cash and cash equivalents of $29.0 million and patient accounts receivable were $36.6 million, compared to net 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 $43.8 million as at December 31, 2009, compared to $37.4 million as at December 31, 2008. Medical Facilities had outstanding convertible secured debentures of $39.2 million as at December 31, 2009, compared to $33.1 as at December 31, 2008. Interest expense on the convertible secured debentures was $2.8 million for the twelve months ended December 31, 2009 compared to $2.7 million for the twelve months ended December 31, 2008.
Normal Course Issuer Bid
The Corporation continues to repurchase its IPS units in the open market. By repurchasing and cancelling its units, Medical Facilities is reducing the total amount of distributions payable, resulting in cash savings for the Corporation. The NCIB also benefits the remaining Medical Facilities' unitholders, as it causes the payout ratio to increase.
On April 23, 2009, the Corporation received regulatory approval for its normal course issuer bid ("NCIB") to purchase up to 1,420,049 of its IPS units during the period from April 25, 2009 to April 24, 2010. Under this NCIB, 48,600 IPS units of Medical Facilities have been repurchased and cancelled at an average cost of Cdn$8.70 per unit, for a total consideration of Cdn$0.4 million.
From January 1, 2009 to December 31, 2009, the Corporation purchased and cancelled 285,500 of its IPS units at an average cost of Cdn$7.77 per unit for a total consideration of Cdn$2.2 million. The cancellation of these IPS units has resulted in a total distribution saving of C$0.3 million for the Corporation.
As at December 31, 2009, the Corporation had 28,359,506 IPS units outstanding.
Impairment of Goodwill
Due to indications of a potential impairment of intangibles and goodwill for Barranca, the Corporation tested Barranca's intangibles and goodwill for impairment as at September 30, 2009 and determined that these intangible assets should be completely written off. Therefore, an impairment of $4.7 million is reflected in the results of the Corporation for the period ended December 31, 2009.
The Corporation performed its annual impairment test for intangibles and goodwill as at December 31, 2009 and determined that there was no further impairment of intangibles and goodwill.
In March 2010, OSH completed another expansion project involving the conversion of existing space into five additional overnight stay rooms, three additional pain management bays, and an expansion of the materials handling area, for a total cost of $0.9 million.
Medical Facilities' complete 2009 financial statements and Management Discussion & Analysis will be issued and filed on SEDAR on Monday, March 22, 2010 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 22, 2010 at 10:00 am (ET) to discuss its 2009 fourth quarter and year end financial results. You can join the call by dialling 1-888-231-8191 or 647-427-7450. 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 Monday, March 29, 2010 at midnight by calling 1-800-642-1687 or 416-849-0833, reference number 59314798 followed by the number sign.
To view Medical Facilities' Fiscal 2009 financial statements and notes, please click here: http://files.newswire.ca/736/MFC_FS_YE_2009.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.
SOURCE Medical Facilities Corporation
For further information: For further information: Michael Salter, Chief Financial Officer, Medical Facilities Corp., (416) 848-7380 or 1-877-402-7162; Adriana Braczek, Investor Relations, The Equicom Group Inc., (416) 815-0700 or 1-800-385-5451 ext. 240, firstname.lastname@example.org