Medical Facilities Corporation Reports Fiscal 2007 Third Quarter Financial Results



    TORONTO, Nov. 12 /CNW/ - Medical Facilities Corporation ("Medical
Facilities") (TSX:DR.UN), today reported its financial results for the three
and nine-month periods ended September 30, 2007. All amounts are expressed in
U.S. dollars unless indicated otherwise.

    
    Q3 07 HIGHLIGHTS

    -  Net revenues increased 12.5% to $38.7 million in Q3 07 from
       $34.4 million in Q3 06
    -  Operating income increased 11.8% to $15.2 million in Q3 07 from
       $13.6 million in Q3 06
    -  Cash available for distribution(1) totalled C$8.3 million and declared
       distributions totalled C$7.8 million, representing a payout ratio of
       93.5% for the quarter
    -  Subsequent to the end of the quarter, Medical Facilities acquired a
       51% interest in an Ambulatory Surgical Center located in California
       for approximately $9.5 million in cash
    

    "We are pleased to report same center revenue growth at each of our
locations during the quarter, including a 15.3% increase at Oklahoma Spine.
Our consolidated operating margins remained steady in the range of 40
percent," said Dr. Donald Schellpfeffer, CEO of Medical Facilities. "We remain
focused on initiatives to enhance operating margins and drive capacity
utilization at each of our Centers. We have increased our marketing activities
towards physicians, patients and payors to build awareness of the unique
benefits Medical Facilities can offer each of these key stakeholder groups. In
addition to organic growth initiatives, we are committed to pursuing accretive
acquisitions of Ambulatory Surgical Centers and other specialty hospitals in
strategic markets and are pleased to announce our recent acquisition of a 51%
interest in Barranca Surgery Center, LLC, an Ambulatory (out-patient) Surgical
Center located in Irvine, California. We expect this acquisition to be
immediately accretive to cash available for distribution."

    Financial Results

    For the three months ended September 30, 2007, Medical Facilities
generated cash available for distribution(1) ("CAFD") of C$8.3 million or
C$0.294 per IPS unit, and declared distributions (comprised of interest on
subordinated notes and dividends on common shares) of C$7.8 million or C$0.275
per IPS unit, representing a payout ratio of 93.5% for the quarter. For the
nine months ended September 30, 2007, Medical Facilities generated CAFD(1) of
C$27.3 million or C$0.971 per IPS unit, and declared distributions of
C$23.2 million or C$0.826 per IPS unit, representing a payout ratio of 85.1%
for the period. Portions of Medical Facilities' expected future U.S. dollar
cash flows available for distribution are hedged and will be converted at
exchange rates averaging C$1.2000, C$1.1232 and C$1.0898 in each of the next
three years.
    Net patient service revenues ("net revenues") for the third quarter of
2007 increased 12.8% to $38.7 million compared to net revenues of
$34.4 million in the third quarter of 2006. Net revenues during the quarter
increased at all four Centers due to greater case volume at Sioux Falls
Surgical Center and Oklahoma Spine Hospital and a more favourable case mix at
all Centers.
    Consolidated expenses, including salaries and benefits, drugs and
supplies and general and administrative costs ("consolidated expenses") for
the third quarter of 2007 totalled $23.5 million or 60.7% of net revenues,
compared to consolidated expenses of $20.8 million or 60.5% of net revenues in
the third 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 third
quarter of 2007 increased 11.8% to $15.2 million or 39.2% of net revenues,
compared to operating income (before depreciation and amortization, interest
expense, loss on foreign currency translation and minority interest) of
$13.6 million or 39.5% of net revenues in the third quarter a year ago.
Increased operating income reflects strong performance at the Centres.
    Net loss for the third quarter of 2007 totalled $9.1 million or $0.308
per IPS unit (basic and fully diluted), compared to a net loss of $1.8 million
or $0.063 per IPS unit (basic and fully diluted) in the third quarter of 2006.
The increased net loss in the third quarter of 2007 resulted primarily from
increased foreign exchange loss, increased provision for current and future
income taxes and income attributable to the minority interest, compared to the
third quarter a year ago.
    For the nine months ended September 30, 2007, net revenues increased
14.4% to $121.9 million, compared to net revenues of $106.6 million in the
corresponding period a year ago. Consolidated expenses for the nine months
ended September 30, 2007 totalled $72.4 million or 59.4% of net revenues,
compared to consolidated expenses of $63.7 million or 59.8% of net revenues in
the first nine months of 2006. Operating income (before depreciation and
amortization, interest expense, loss on foreign currency translation and
minority interest) increased 15.6% to $49.5 million or 40.6% of net revenues,
compared to operating income (before depreciation and amortization, interest
expense, loss on foreign currency translation and minority interest) of
$42.8 million or 40.2% of net revenues in the same period a year ago. Net loss
for the first nine months of 2007 totalled $18.0 million or $0.649 per IPS
unit (basic and fully diluted), compared to a net loss of $5.4 million or
$0.193 per IPS unit (basic and fully diluted) in the same period a year ago.
    As at September 30, 2007, Medical Facilities had working capital of
$43.0 million, including cash and cash equivalents of $20.5 million, compared
to working capital of $38.6 million, including cash and cash equivalents of
$15.4 million as at December 31, 2006. Barranca Surgery Center's acquisition
costs of approximately $9.5 million were funded out of cash on hand. Long-term
debt at the Centers' level, including the current portion, was $23.2 million
as at September 30, 2007, compared to $24.6 million as at December 31, 2006.
    Medical Facilities' 2007 third quarter financial statements and
Management's Discussion & Analysis ("MD&A"), for the three and nine-month
periods ended September 30, 2007, will be issued and filed on SEDAR on Monday,
November 12 and will be available the same day via Medical Facilities' website
at www.medicalfacilitiescorp.ca.

    ------------------------------
    (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.


    Notice of Conference Call and Webcast

    Management of Medical Facilities will host a conference call today,
November 12 at 10:00 am (ET) to discuss its 2007 third 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 your convenience. A taped replay of
the conference call will be available until Monday, November 19 at midnight at
1-877-289-8525 or 416-640-1917, reference number 21251352 followed by the
number sign.

    About Medical Facilities Corporation

    Medical Facilities owns controlling interests in four surgical hospitals,
three located in South Dakota and one in Oklahoma. The four hospitals provide
facilities for scheduled surgical, pain management, imaging and diagnostic
procedures and derive their revenue from the fees charged for the use of their
facilities. Medical Facilities is structured so that a majority of its free
cash flows from operations are distributed to holders of its IPS with a
portion of such distributions being interest payments on the subordinated debt
component. 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.

    %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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