TORONTO, Aug. 14, 2012 /CNW/ - Medical Facilities Corporation ("Medical Facilities" or the "Corporation") (TSX: DR), today reported its financial results for the three-month and six-month periods ended June 30, 2012. All amounts are expressed in U.S. dollars unless indicated otherwise.
Second Quarter 2012 Highlights
- Revenue of $55.1 million, compared with $54.3 million in Q2 2011
- Income from operations of $19.2 million, compared with $21.4 million in Q2 2011
- Cash available for distribution1 of Cdn$9.2 million, up from Cdn$8.3 million in Q2 2011
- Payout ratio of 85.1%, compared with 94.5% in Q2 2011
"Following on a strong start of the year, we are pleased to report that cash available for distribution generated in the first six months of 2012 increased by 17.4% over 2011 and for the second quarter by 11.1% over 2011," stated Dr. Donald Schellpfeffer, CEO of Medical Facilities. "This performance resulted in a year-to-date payout ratio of 82.0%, which compares very favourably with the 96.3% payout ratio a year earlier. As expected, we noted quarterly fluctuations by Center in our operating results for the second quarter. While we experienced increases in income from operations at all of our Centers in the first quarter, results in the second quarter were mixed primarily due to planned and unplanned physician absences, changes in case mix, and expenses related to primary care and urgent care. As we noted last quarter, it should be expected that quarterly fluctuations in operations may occur in future quarters."
Three months ended June 30, 2012
The Corporation generated cash available for distribution1 ("CAFD") of Cdn$9.2 million, or Cdn$0.323 per common share, and declared dividends of Cdn$7.8 million, or Cdn$0.275 per common share, representing a payout ratio of 85.1% for the quarter compared to 94.5% for the same quarter last year. Key contributors to this improvement in the payout ratio were higher foreign exchange currency gains and a lower provision for current income taxes.
Consolidated facility service revenue ("revenue") was $55.1 million, an increase of 1.4% from revenue of $54.3 million for the second quarter of 2011, while income from operations declined by 10.5% to $19.2 million, or 34.8% of revenue, from $21.4 million, or 39.5% of revenue, a year ago. Revenues and income from operations were impacted by an increase in orthopaedic and neurosurgery cases offset by lower pain management revenue at Sioux Falls and an increase in pain management and imaging procedures and a favourable case mix at Dakota Plains and Black Hills, which were offset by a decline in surgical cases and unfavourable shifts in case and payor mix at Newport Coast as well as declines in procedures and cases at Oklahoma Spine. Expenses related to the start-up phase of the primary care and urgent care initiatives also impacted income from operations.
Net income was $8.4 million, or $0.066 per share (basic) and $0.062 per share (fully diluted) compared with a total net loss of $10.1 million, or a loss of $0.600 per share (basic and fully diluted), for the same quarter last year. The $18.5-million increase in net income resulted from several factors, including changes in income taxes and the decrease in interest expense related to the extinguishment of subordinated notes payable, offset by the higher increase in value of the exchangeable interest liability, higher operating expenses, and foreign exchange losses.
Six months ended June 30, 2012
The Corporation generated CAFD of Cdn$19.0 million, or Cdn$0.671 per common share, and declared distributions of Cdn$15.6 million, or Cdn$0.550 per common share, representing a payout ratio of 82.0%. The improvement in payout ratio from 96.3% for the same period last year was largely attributable to improved year-to-date operating performance, higher cash flows from the Centers, and foreign currency gains, partially offset by higher maintenance capital expenditures and a higher provision for current income taxes.
Revenue was $115.1 million, an increase of 8.5% from $106.1 million a year earlier, which was attributable to a strong year-over-year growth across all but one Center. Revenue at Sioux Falls grew by 14.0% due to a higher number of neurosurgery and orthopedic cases. Oklahoma Spine revenue grew by 6.7% as a result of favourable case mix and an increase in pain management procedures, while Black Hills recorded 6.6% growth due to increases in surgical cases and pain management procedures.
Consolidated expenses increased by $5.8 million, or 8.7%. As a percentage of revenue, consolidated expenses increased marginally to 62.8% from 62.6% for the same period last year. Salaries and benefits, drugs and supplies expenses, and general and administrative expenses all increased versus the year-ago period.
Consolidated operating income was $42.8 million, or 37.2% of revenue, an 8.1% increase from consolidated operating income of $39.6 million, or 37.4% of revenue, for the same period a year ago.
Net income was $20.6 million, or $0.213 per share (basic and fully diluted), compared with net loss of $19.1 million, or $1.136 per share (basic and fully diluted), for the same period last year. The $39.7-million increase in net income was primarily due to strong operating performance of the Centers, a lower increase in value of exchangeable interest liability, lower interest expense, foreign currency gains, and changes in income taxes. For the six months, current taxes increased; however, total tax provision decreased.
As at June 30, 2012, the Corporation had consolidated net working capital of $56.2 million, including cash and cash equivalents of $35.3 million and patient accounts receivable of $38.3 million, compared with net working capital of $50.2 million, including cash and cash equivalents and short-term and long-term bank deposits of $29.5 million and patient accounts receivable of $41.5 million, as at December 31, 2011. Long-term debt at the Centers' level, including the current portion, was $42.0 million as at June 30, 2012 compared with $44.0 million as at December 31, 2011.
As at June 30, 2012, the Corporation had 28,347,964 common shares outstanding.
Medical Facilities' complete 2012 second quarter financial statements and Management's Discussion & Analysis will be issued and filed on SEDAR on Tuesday, August 14, 2012 and will be available on the same day on Medical Facilities' website at www.medicalfacilitiescorp.ca.
Normal Course Issuer Bid
Under the normal course issuer bid ("NCIB") that commenced on May 15, 2012, the Corporation purchased 20,058 of its common shares during the second quarter at an average cost of Cdn$13.42. Subsequent to June 30, 2012 and up to and including July 13, 2012, the Corporation purchased another 9,500 of its common shares at an average cost of Cdn$13.52.
All securities purchased under the NCIB are cancelled. By repurchasing and cancelling its common shares, Medical Facilities reduces the total amount of dividends payable, resulting in cash savings for the Corporation. The remaining shareholders also benefit from the NCIB as the distributable cash per share increases.
Notice of Conference Call
Management of Medical Facilities will host a conference call today, Tuesday, August 14, 2012 at 10:00 am (ET) to discuss its 2012 second quarter 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 Tuesday, August 21, 2012 at midnight by calling 416-849-0833 or 1-855-859-2056, reference number 99516695.
To view Medical Facilities Q2 2012 financial statements and notes, please click here: http://files.newswire.ca/940/MFCFSIFRSQ22012.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, diagnostic and other procedures, including primary and urgent 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.
SOURCE: Medical Facilities Corporation
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