Medical Facilities Corporation Reports Fiscal 2007 Second Quarter Financial Results



    TORONTO, Aug. 13 /CNW/ - Medical Facilities Corporation ("Medical
Facilities") (TSX:DR.UN), today reported its financial results for the three
and six-month periods ended June 30, 2007. All amounts are expressed in U.S.
dollars unless indicated otherwise.

    
    Q2 07 HIGHLIGHTS

    -   Net revenues increased 16.6% to $42.0 million from $36.1 million
        in Q2 06
    -   Operating income increased 19.3% to $17.1 million from $14.4 million
        in Q2 06
    -   Cash available for distribution(1) totalled C$9.3 million and
        declared distributions totalled C$7.7 million, representing a payout
        ratio of 82.8%, down from a payout ratio of 87.9% in Q2 06
    

    "We achieved solid revenue growth at all of our Centers, largely driven
by increased case volumes and a more favourable case mix," said Dr. Donald
Schellpfeffer, CEO of Medical Facilities. "Our South Dakota Centers delivered
19.9 percent same-center revenue growth for the quarter and we are pleased to
report that Oklahoma Spine Hospital achieved revenue growth for the second
consecutive quarter and generated 11.7 percent growth in operating income
during the second quarter. We continue to focus on optimizing the financial
performance of Oklahoma Spine Hospital. We are actively recruiting additional
physicians, including neurosurgeons, orthopedic surgeons and pain management
specialists to drive capacity utilization."

    Financial Results

    For the three months ended June 30, 2007, Medical Facilities generated
cash available for distribution(1) ("CAFD") of C$9.3 million or C$0.332 per
IPS unit, and declared distributions (comprised of interest on subordinated
notes and dividends on common shares) of C$7.7 million or C$0.275 per IPS
unit, resulting in a payout ratio of 82.8% for the quarter, down from a payout
ratio of 87.9% in the second quarter a year ago. For the six months ended June
30, 2007, Medical Facilities generated CAFD(1) of C$19.0 million or C$0.677
per IPS unit, and declared distributions of C$15.4 million or C$0.550 per IPS
unit, resulting in a payout ratio of 81.2% for the first half of 2007, down
from a payout ratio of 86.9% in the same period a year ago. 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$1.2295, C$1.1418 and C$1.1110 in each of the next three years.
    Net patient service revenues ("net revenues") for the second quarter of
2007 increased 16.6% to $42.0 million compared to net revenues of
$36.1 million in the second quarter of 2006. Net revenues during the quarter
increased at all four Centers due to greater case volumes and a more
favourable case mix. Revenue growth was slightly offset by a less favourable
payor mix, which caused a higher provision for contractual allowances.
    Consolidated expenses, including salaries and benefits, drugs and
supplies and general and administrative costs ("consolidated expenses") for
the second quarter of 2007 totalled $24.9 million or 59.2% of net revenues,
compared to consolidated expenses of $21.6 million or 60.0% of net revenues in
the second quarter a year ago. Increased consolidated expenses resulted
primarily from the costs associated with the increased number of cases, 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 second
quarter of 2007 increased 19.3% to $17.1 million or 40.8% of net revenues,
compared to operating income (before depreciation and amortization, interest
expense, loss on foreign currency translation and minority interest) of
$14.4 million or 39.9% of net revenues in the second quarter a year ago.
Increased operating income reflects strong performance at the Centres.
    Net loss for the second quarter of 2007 totalled $7.5 million or
($0.29) per IPS unit (basic and fully diluted), compared to a net loss of
$4.4 million or ($0.16) per IPS unit (basic and fully diluted) in the second
quarter of 2006. The increased net loss in the second quarter of 2007 resulted
primarily from increased foreign exchange loss, increased income taxes and
higher minority interest, compared to the second quarter a year ago.
    For the six months ended June 30, 2007, net revenues increased 15.3% to
$83.2 million, compared to net revenues of $72.2 million in the corresponding
period a year ago. Consolidated expenses for the six months ended June 30,
2007 totalled $48.8 million or 58.7% of net revenues, compared to consolidated
expenses of $42.8 million or 59.3% of net revenues in the first six months of
2006. Operating income (before depreciation and amortization, interest
expense, loss on foreign currency translation and minority interest) increased
17.2% to $34.3 million or 41.2% of net revenues, compared to operating income
(before depreciation and amortization, interest expense, loss on foreign
currency translation and minority interest) of $29.3 million or 40.5% of net
revenues in the same period a year ago. Net loss for the fist six months of
2007 totalled $8.8 million or $(0.34) per IPS unit (basic and fully diluted),
compared to a net loss of $4.8 million or $(0.16) per IPS unit (basic and
fully diluted) in the same period a year ago.
    Medical Facilities' 2007 second quarter financial statements and
Management's Discussion & Analysis ("MD&A"), for the three and six-month
periods ended June 30, 2007, will be issued and filed on SEDAR today and will
be available via Medical Facilties' website today at
www.medicalfacilitiescorp.ca and the SEDAR website at www.sedar.com tomorrow.

    Notice of Conference Call and Webcast

    Management of Medical Facilities will host a conference call today,
August 13 at 10:30 am (EDT) to discuss its 2007 second 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, August 20 at midnight at
1-877-289-8525 or 416-640-1917, reference number 21240068 followed by the
number sign.

    
    (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. 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.
    

    About Medical Facilities Corporation

    MFC owns controlling interests in four surgical hospitals, three located
in South Dakota and one in Oklahoma. The four hospitals perform scheduled
surgical, 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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