Medical Facilities Corporation Reports 2009 Second Quarter Financial Results



    TORONTO, Aug. 14 /CNW/ - Medical Facilities Corporation ("Medical
Facilities" or "the Corporation") (TSX: DR.UN), today reported its financial
results for the three and six-month periods ended June 30, 2009. All amounts
are expressed in U.S. dollars unless indicated otherwise.

    
    Q2 2009 Highlights
    ------------------

    -   Facility service revenue increased 7.9% to $52.2 million from $48.4
        million in Q2 2008
    -   Consolidated operating income increased 2.7% to $19.4 million from
        $18.9 million in Q2 2008
    -   Cash available for distribution(1) after realized gains or losses on
        foreign currency hedges totalled Cdn$9.4 million (Cdn$9.9 million in
        Q2 2008) and declared distributions totalled Cdn$7.8 million (Cdn$8.0
        million in Q2 2008), representing a payout ratio of 83.1% for the
        quarter (80.9% in Q2 2008)
    -   80.4% payout ratio based on cash available for distribution(1) from
        operations before realized gains or losses on foreign currency hedges
        (87.3% in Q2 2008)
    -   Commenced utilization of nine new overnight stay rooms at Sioux Fall
        Surgical Hospital
    

    "We are pleased to report on a record second quarter, with revenue and
operating income growth at each of our specialty surgical hospitals," said Dr.
Donald Schellpfeffer, CEO of Medical Facilities. "Our strong overall
performance in the quarter was led by Sioux Falls, which delivered revenue and
operating income growth of 21.8% and 19.3%, respectively. This year-over-year
increase is largely attributable to increased capacity utilization resulting
from the recent addition of nine new overnight stay rooms - a product of a
$15.6 million facility expansion at that Center - which has provided for the
opportunity to take on more complex cases. We expect the entire Sioux Falls
expansion to be completed in the fourth quarter of 2009. Also of note, our
Dakota Plains and Oklahoma Spine hospitals recorded revenue growth of 10.4%
and 7.5%, respectively, in the quarter due to higher revenue generating cases
performed and an overall increase in surgical case volumes. Our ASCs in
California continue to perform below our expectations. We continue to give
these Centers our focused attention and to take the appropriate measures to
improve their performance."
    "As we move forward with our expansion projects at Sioux Falls, Dakota
Plains and Black Hills, we will continue to strengthen our physician
complement with foremost specialists in their field to optimize facility
utilization rates," added Dr. Schellpfeffer. "As a best-in-class healthcare
provider, our primary objective is to provide the highest quality care to our
patients. We succeed in this respect by attracting the best healthcare
practitioners to our Centers, offering them a more efficient work environment
and greater control of their scheduling, as well as flexibility for further
professional development."

    
    Financial Results
    -----------------

    Three months ended June 30, 2009
    

    For the three months ended June 30, 2009, Medical Facilities generated
cash available for distribution(1) ("CAFD") of Cdn$9.4 million or Cdn$0.331
per income participating security ("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
83.1% for the quarter.
    Facility service revenue ("revenue") for the second quarter of 2009
increased 7.9% to $52.2 million compared to revenue of $48.4 million in the
second quarter of 2008. The growth in revenue is attributable to an increase
in surgical case volumes at Oklahoma Spine Hospital ("OSH"), and Sioux Falls
Surgical Hospital ("SFSH"), as well as an increase in higher revenue
generating cases at SFSH, Dakota Plains Surgical Center ("DPSC") and OSH.
    Consolidated expenses, including salaries and benefits, drugs and
supplies and general and administrative costs ("consolidated expenses") for
the second quarter of 2009 totalled $32.8 million or 62.9% of revenue,
compared to consolidated expenses of $29.5 million or 61.0% of revenue in the
second quarter a year ago. Increased consolidated expenses resulted primarily
from augmented surgical case volumes 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 second quarter of 2009 increased 2.7%
to $19.4 million or 37.1% of revenue, compared to operating income of $18.9
million or 39.0% of revenue in the second quarter a year ago. The increase in
operating income is largely attributable to the improved performance at SFSH
and OSH.
    Consolidated net loss for the second quarter of 2009 totalled $4.5
million or a loss of $0.149 per IPS unit (basic and fully diluted), compared
to a consolidated net loss of $0.6 million or $0.002 per IPS unit (basic and
fully diluted) in the second quarter of 2008.

    Six months ended June 30, 2009

    For the six months ended June 30, 2009, Medical Facilities generated cash
available for distribution1 ("CAFD") of Cdn$18.7 million or Cdn$0.659 per IPS
unit, and declared distributions (comprised of interest on subordinated notes
and dividends on common shares) of Cdn$15.6 million or Cdn$0.550 per IPS unit,
representing a payout ratio of 83.5% for the six months ended June 30, 2009.
    Facility service revenue ("revenue") for the six-month period ended June
30, 2009 increased 4.9% to $100.4 million from revenue of $95.7 million in the
same period a year ago. Increased revenue for the period is primarily
attributable to a more favourable case mix and an increase in higher revenue
generating cases at DPSC, favourable changes in case and payor mix at OSH, and
an increase in case volumes and higher revenue procedures at SFSH.
    Consolidated expenses, including salaries and benefits, drugs and
supplies and general and administrative costs ("consolidated expenses") for
the six months ended June 30, 2009 totalled $62.4 million or 62.1% of revenue,
compared to consolidated expenses of $57.8 million or 60.4% of revenue in the
six months ended June 30, 2008. Increased consolidated expenses as a
percentage of revenues resulted primarily from weaker than expected
performance at Medical Facilities' two California ASCs, as well as an increase
in surgical case volumes 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") was relatively flat for the six months ended
June 30, 2009 at $38.1 million or 37.9% of revenue, compared to operating
income of $37.9 million or 39.6% of revenue for the six months ended June 30,
2008. The marginal increase in consolidated operating income was primarily due
to moderate revenue growth at SFSH, DPSC and OSH offset by the weaker than
expected performance of the California ASCs.
    Consolidated net loss for the six-month period ended June 30, 2009
totalled $2.9 million or a loss of $0.096 per IPS unit (basic and fully
diluted), compared to consolidated net income of $2.6 million or $0.103 per
IPS unit (basic and fully diluted) in the same period in 2008.
    As at June 30, 2009, the Corporation had consolidated net working capital
of $52.6 million including cash and cash equivalents of $28.6 million and
patient accounts receivable of $33.7 million, compared to net working capital
of $52.4 million, including cash and cash equivalents of $25.7 million and
patient accounts receivable of $38.5 million as at December 31, 2008.
Long-term debt at the Centers' level, including the current portion, was $39.6
million as at June 30, 2009, compared to $37.4 million as at December 31,
2008.

    
    Normal Course Issuer Bid
    ------------------------
    

    On April 25, 2009, Medical Facilities commenced a normal course issuer
bid for up to 1,420,049 of its IPS units. Combined with Medical Facilities'
prior normal course issuer bid for IPS units, from April 25, 2008 through to
June 16, 2009, the Company has now purchased and cancelled 769,100 of its IPS
units for a total cash consideration of Cdn$5.7 million.
    As at June 30, 2009, the Corporation had 28,329,575 IPS units
outstanding.
    Medical Facilities' complete 2009 second quarter financial statements and
management's discussion & analysis will be issued and filed on SEDAR on
Friday, August 14, 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, August 14, 2009 at 10:00 am (ET) to discuss its 2009 second quarter
financial results. You can join the call by dialling 416-644-3420 or
1-800-731-5319. 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, August 21, 2009 at
midnight by calling 1-877-289-8525 or 416-640-1917, reference number 21310865
followed by the number sign.

    To view Medical Facilities Q2 2009 financial statements and notes, please
click here:
    http://files.newswire.ca/476/MEDICALiza.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:

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,
Equicom Group, (416) 815-0700 or 1-800-385-5451 ext. 240 or 228,
abraczek@equicomgroup.com or bwigle@equicomgroup.com


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