- Consolidated facility service revenue of $311.8 million, up 0.9% as compared with $309.2 million in 2013
- Consolidated income from operations of $71.2 million, down 2.8% as compared with $73.3 million in 2013
- Cash available for distribution1 of Cdn$41.4 million, up 1.3% as compared with Cdn$40.8 million in 2013
- Payout ratio1 of 85.2% as compared with 84.3% in 2013
Fourth Quarter 2014 Summary
- Consolidated facility service revenue of $87.6 million, down 2.2% as compared with $89.6 million in Q4 2013
- Consolidated income from operations of $24.4 million, down 2.0% as compared with $24.9 million in Q4 2013
- Cash available for distribution1 of Cdn$12.2 million, down 9.6% as compared with Cdn$13.5 million in Q4 2013
- Payout ratio1 of 72.1% as compared with 65.2% in Q4 2013
"We are pleased to report that growth in case volumes and ancillary services revenues continued for the full year and in the fourth quarter 2014 but were impacted by unfavorable shifts in payor mix and a $1.3 million year-over-year reduction in Electronic Health Records incentive payments. These two factors were the prime contributors to year-over-year and fourth quarter declines in income from operations. However, the fourth quarter continued as our strongest quarter again in 2014. We continue to remain focused on initiatives to increase the number of physician partners at our facilities, reduce costs, and continue to source and evaluate accretive acquisition opportunities," said Dr. Donald Schellpfeffer, CEO of Medical Facilities.
Financial and Operating Results
Full Year 2014
The Company generated cash available for distribution ("CAFD") of Cdn$41.4 million, or Cdn$1.320 per common share, and declared dividends of Cdn$35.3 million, or Cdn$1.125 per common share, representing a payout ratio of 85.2% compared to 84.3% a year earlier. In U.S.-dollar terms, CAFD decreased by US$2.1 million primarily due to foreign currency losses on foreign exchange forward contracts which matured in the respective periods, partially offset by lower debt service costs, maintenance capital expenditures and interest expense on convertible debentures.
Consolidated facility service revenue ("revenue") was $311.8 million, an increase of $2.7 million or 0.9% from $309.2 million a year earlier, which was primarily attributable to the increased revenues from surgical cases, pain management procedures, ancillary services and annual price increases, partially offset by unfavourable shifts in payor mix and a $1.3 million decline in payments received under the Electronic Health Records Program ("EHR incentive payments").
Consolidated operating expenses, including salaries and benefits, drugs and supplies, general and administrative expenses, depreciation of property and equipment, and amortization of other intangibles, ("consolidated expenses") totalled $240.6 million, or 77.2% of revenue, compared with consolidated expenses of $235.9 million, or 76.3% of revenue, a year ago. The increase in consolidated expenses was primarily attributable to higher case volumes, annual wage and salary increases and increases in general and administrative expenses.
Consolidated income from operations was $71.2 million, or 22.8% of revenue, a $2.0 million or 2.8% decrease from consolidated income from operations of $73.3 million, or 23.7% of revenue for the same period a year ago, as increases in consolidated expenses offset growth in revenue.
Consolidated net income was $55.0 million, or $0.744 per share (basic) and $0.560 per share (fully diluted) compared with a consolidated net income of $44.6 million, or $0.362 per share (basic and fully diluted), for 2013. The increase of $10.4 million in consolidated net income was attributable to the impact of changes in values of exchangeable interest liability and convertible debentures, which were partially offset by an increase in income tax expense.
Fourth Quarter 2014
The Company generated CAFD of Cdn$12.2 million, or Cdn$0.390 per common share, and declared dividends of Cdn$8.8 million, or Cdn$0.281 per common share, representing a payout ratio of 72.1% for the quarter compared to 65.2% for the same quarter last year. In U.S.-dollar terms, CAFD decreased by US$2.1 million compared to the same quarter in 2013 due to higher provision for current income taxes, lower cash flows from the Centers and higher foreign currency losses on foreign exchange forward contracts which matured in the respective periods.
Revenue of $87.6 million decreased by $2.0 million or 2.2% compared to the fourth quarter of 2013 as growth in case volumes and ancillary services revenues (imaging, urgent and primary care, etc.) were impacted by the unfavourable shifts in payor and case mix and a $1.3 million reduction in EHR incentive payments.
Consolidated expenses totalled $63.2 million, or 72.1% of revenue, compared with consolidated expenses of $64.7 million, or 72.2% of revenue, a year ago. The $1.5 million or 2.3% decline in consolidated expenses was primarily attributable to the decreases in drugs and supplies expenses and amortization of other intangibles which were partially offset by the growth in general and administrative expenses.
Consolidated income from operations was $24.4 million, or 27.9% of revenue, a $0.5 million or 2.0% decrease from consolidated income from operations of $24.9 million, or 27.8% of revenue, a year ago.
Consolidated net income was $8.6 million, or a loss of $0.051 per share (basic and fully diluted), compared with a consolidated net income of $21.0 million, or $0.323 per share (basic and fully diluted), for the same period last year. The decline of $12.5 million in consolidated net income was primarily attributable to the increase in income tax expense.
As at December 31, 2014, the Company had consolidated net working capital of $61.9 million, including cash and cash equivalents and short-term and long-term investments of $54.2 million and accounts receivable of $47.0 million, compared with net working capital of $44.8 million, including cash and cash equivalents and short-term and long-term investments of $48.7 million and accounts receivable of $50.3 million, as at December 31, 2013. Long-term debt at the Centers' level, including the current portion, was $40.2 million as at December 31, 2014 compared with $42.4 million as at December 31, 2013.
Medical Facilities' complete fourth quarter and year-end 2014 financial statements and management's discussion and analysis will be issued and filed on SEDAR at www.sedar.com on Thursday, March 19, 2015 and will be available on the same day on Medical Facilities' website at www.medicalfacilitiescorp.ca.
Normal Course Issuer Bid ("NCIB")
The Company repurchases its common shares in the open market. By repurchasing and cancelling its common shares, Medical Facilities reduces the total amount of dividends payable, resulting in cash savings for the Company. The remaining shareholders also benefit from the NCIB as the distributable cash per share increases.
During 2014, the Company purchased 55,600 of its common shares at an average price of Cdn$17.15 per share, for a total consideration of Cdn$1.0 million. The cancellation of these common shares resulted in total savings of Cdn$62,550.
As at December 31, 2014, the Company had 31,329,598 common shares outstanding.
Notice of Conference Call
Management of Medical Facilities will host a conference call today, Thursday, March 19, 2015 at 10:00 am ET to discuss its fourth quarter and year-end 2014 financial results. You can join the call by dialing 647.427.7450 or 1.888.231.8191. A taped replay of the conference call will be available from March 19, 2015 at 12:00 pm ET until March 26, 2015 at 11:59 pm ET by calling 416.849.0833 or 1.855.859.2056, reference number 85672709.
About Medical Facilities
Medical Facilities owns controlling interests in five specialty surgical hospitals located in Arkansas, Oklahoma and South Dakota, as well as an ambulatory surgery center in California. The specialty hospitals perform scheduled surgical, imaging, diagnostic and other procedures, including urgent and primary care, and derive their revenue from the fees charged for the use of their facilities. The ambulatory surgery center specializes 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 the holders of its common shares in the form of dividends. 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 and payout ratio are non-IFRS measures. While Medical Facilities believes that these measures are useful for the evaluation and assessment of its performance, they do not have any standard meaning prescribed by IFRS, are unlikely to be comparable to similar measures presented by other issuers, and should not be considered as alternatives to comparable measures determined in accordance with IFRS. For further information on these non-IFRS measures, including a reconciliation of each of these non-IFRS measures to the most directly comparable measure calculated in accordance with IFRS, please refer to Medical Facilities' most recently filed management's discussion and analysis, available on SEDAR at www.sedar.com.
SOURCE Medical Facilities Corporation
For further information: Michael Salter, Chief Financial Officer, Medical Facilities Corporation, (416) 848-7380 or 1-877-402-7162, email@example.com; Renée Lam, Investor Relations, TMX Equicom, (416) 815-0700 or 1-800-385-5451 ext. 258, firstname.lastname@example.org