TORONTO, March 22, 2012 /CNW/ - Medical Facilities Corporation ("Medical Facilities" or the "Corporation") (TSX: DR), today reported its financial results for the three-month and twelve-month periods ended December 31, 2011. All amounts are expressed in U.S. dollars unless indicated otherwise.
Annual 2011 Summary
- Revenue of $220.8 million, compared to $217.9 million in 2010
- Operating income of $82.4 million, compared to $81.7 million in 2010
- Operating margin of 37.3%, compared to 37.5% in 2010
Fourth Quarter 2011 Summary
- Revenue of $62.9 million, compared to $64.4 million in Q4 2010
- Operating income of $24.6 million, compared to $26.7 million in Q4 2010
- Operating margin of 39.2%, compared to 41.4% in Q4 2010
"We are pleased to report another year of increasing revenues and operating income in 2011," said Dr. Donald Schellpfeffer, CEO of Medical Facilities. "Consolidated revenue increased on a year-over-year basis as we encountered positive case mix and increased pain management procedures at some Centers, offset partially by declines in surgical cases and less favourable case and payor mixes at other Centers. Fourth quarter results were strong relative to historical trends; however, they were below the strong fourth quarter of 2010.
"Two of our hospitals are undertaking initiatives with respect to primary and urgent care which are designed to diversify the services offered to a broader market. The Centers continue to focus on physician recruitment, explore service options including new ways to deliver existing services and pursue cost reduction strategies. Although the political and economic landscape remains uncertain, we continue to believe that our operations will benefit from the fact that revenues are primarily derived from South Dakota and Oklahoma, states that continue to have unemployment and residential foreclosure rates far below the national average," concluded Dr. Schellpfeffer.
Three months ended December 31, 2011
The Corporation generated cash available for distribution1 ("CAFD") of Cdn$9.6 million, or Cdn$0.340 per common share, and declared dividends of Cdn$7.8 million, or Cdn$0.275 per common share, representing a payout ratio of 80.9% for the quarter. The increase in payout ratio from 68.3% for the same quarter last year was largely attributable to the year over year decline in revenue and operating income at our Black Hills Surgical Hospital and Oklahoma Spine Hospital units and an increase in corporate expense and income taxes resulting from our capital restructuring.
Consolidated facility service revenue ("revenue") was $62.9 million, a decrease of 2.3% from the record setting revenue of $64.4 million for the fourth quarter of 2010. The decrease in revenue resulted from a combination of various factors, including, a decrease in consolidated surgical cases, a decrease in consolidated pain management procedures, and a less favourable case and payor mix.
Consolidated operating expenses, including salaries and benefits, drugs and supplies, and general and administrative costs ("consolidated expenses") totalled $38.2 million, or 60.8% of revenue, compared with consolidated expenses of $37.7 million, or 58.6% of revenue, a year ago. Expenses changed marginally as a decrease in salaries and benefits was offset by an increase in general and administrative expenses.
Consolidated operating income was $24.6 million, or 39.2% of revenue, compared to consolidated operating income of $26.7 million, or 41.4% of revenue, a year ago.
Total comprehensive income was $10.1 million, or $0.033 per share (basic and fully diluted) compared to total comprehensive income of $5.2 million, or a loss of $0.144 per share (basic and fully diluted), for the same quarter last year. The increase in comprehensive income resulted from several factors, including the decrease in interest expense related to the extinguishment of subordinated notes payable, changes in income taxes and foreign currency gains, partially offset by a change in the value of exchange interest liability.
Twelve months ended December 31, 2011
The Corporation generated CAFD of Cdn$33.8 million, or Cdn$1.191 per common share, and declared dividends of Cdn$31.2 million, or Cdn$1.100 per common share, representing a payout ratio of 92.3%. The increase in payout ratio from 82.5% for the same period last year was largely attributable to an increase in the provision for current taxes, a decrease in the realized gains on matured foreign exchange forward contracts and the impact of a stronger Canadian dollar.
Revenue was $220.8 million, an increase of 1.3% from $217.9 million a year earlier, which was primarily due to an overall positive case mix and an increase in pain management procedures, partially offset by a decline in surgical cases and a less favourable payor mix.
Consolidated expenses of $138.4 million were $2.2 million higher than for the same period last year, largely due to increases in salaries and benefits, drugs and supplies, and general and administrative expenses. As a percentage of revenue, consolidated expenses increased slightly to 62.7% from 62.5%.
Consolidated operating income was $82.4 million, or 37.3% of revenue, a 0.8% increase from consolidated operating income of $81.7 million, or 37.5% of revenue for the same period a year ago.
Total comprehensive income was $12.7 million, or a loss of $0.521 per share (basic and fully diluted) compared with total comprehensive income of $20.6 million, or a loss of $0.240 per share (basic and fully diluted), for the same period last year. The decrease in comprehensive income was primarily due to the change in the value of subordinated notes payable early redemption option, changes in value of the exchangeable interest liability, and increases in income tax expense, partially offset by foreign currency gains, a stronger performance of the Centers, and lower interest expense.
As at December 31, 2011, the Corporation had consolidated net working capital of $50.2 million, including cash balances of $29.5 million and patient accounts receivable of $41.5 million, compared with net working capital of $62.8 million, including cash balances of $31.6 million and patient accounts receivable of $40.8 million, as at December 31, 2010. Long-term debt at the Centers' level, including the current portion, was $44.0 million as at December 31, 2011 compared with $50.4 million as at December 31, 2010.
As at December 31, 2011, the Corporation had 28,310,042 common shares outstanding.
Normal Course Issuer Bid
Under the normal course issuer bid ("NCIB") that commenced on May 2, 2011, the Corporation purchased 22,000 of its common shares during the fourth quarter at an average cost of Cdn$9.71, for a total consideration of Cdn$0.2 million. For the full year, 148,900 common shares (or IPS units prior to the conversion to a common share structure) of Medical Facilities were repurchased and cancelled at an average cost of Cdn$10.78 per share for a total consideration of Cdn$1.6 million.
All securities purchased under the NCIB are cancelled. By repurchasing and cancelling its securities, Medical Facilities reduces the total amount of dividends payable, resulting in cash savings for the Corporation. The remaining securityholders also benefit from the NCIB as the distributable cash per share increases.
Medical Facilities' complete 2011 fourth quarter and year-end financial statements and Management's Discussion and Analysis will be issued and filed on SEDAR on Thursday, March 22, 2012 and will be available on the same day on Medical Facilities' website at www.medicalfacilitiescorp.ca.
Notice of Conference Call
Management of Medical Facilities will host a conference call today, Thursday, March 22, 2012 at 10:00 am (ET) to discuss its 2011 fourth quarter and year-end 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 until Thursday, March 29, 2012 at midnight by calling 416-849-0833 or 1-855-859-2056, reference number 59511898.
To view Medical Facilities Q4 2011 financial statements and notes, please click here: http://files.newswire.ca/940/MFC_FS_IFRS_Year_End.pdf
About Medical Facilities
Medical Facilities owns controlling interests in four specialty surgical hospitals, located in South Dakota and Oklahoma, as well as an ambulatory surgery center 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 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 is a non-IFRS measure and is not intended to be representative of cash flow or results of operations determined in accordance with IFRS. 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.
PDF with caption: "Consolidated Financial Statements of Medical Corporation". PDF available at: http://stream1.newswire.ca/media/2012/03/22/20120322_C6781_DOC_EN_11452.pdf
For further information:
Chief Financial Officer
Medical Facilities Corporation
(416) 848-7380 or 1-877-402-7162
(416) 815-0700 or 1-800-385-5451 ext. 242