TORONTO, March 9,
2023 /CNW/ - Medical Facilities Corporation ("Medical
Facilities," "MFC," or the "Corporation") (TSX: DR), reported its
financial results today for the fourth quarter and year ended
December 31, 2022. All amounts are
expressed in U.S. dollars unless indicated otherwise.
Q4 2022 Highlights
(Compared to Q4 2021)
- Facility service revenue increased 7.9% to $119.4 million;
- Specialty surgical hospital surgical case volumes increased
5.7%;
- Income from operations was $5.7
million when excluding the $12.3
million reversal of Paycheck Protection Program ("PPP")
income recognized in prior periods;
- Adjusted EBITDA1 was $15.3
million, a decrease of 13.6% when also excluding the
reversal of PPP income;
- Sold the remaining investment in Unity Medical and Surgical
Hospital ("UMASH") and settled the loan receivable for gross
proceeds of $2.0 million; and,
- Recorded a non-cash impairment charge of $16.5 million relating to the MFC Nueterra
ambulatory surgery centers.
"While one-time items impacted our fourth quarter financial
results, our core business remains strong, and we remain focused on
delivering value to our stakeholders," said Jason Redman, President and CEO of Medical
Facilities. "In the fourth quarter, surgical volumes increased at
each of our four specialty surgical hospitals. We closed the book
on UMASH, and we returned additional capital to our shareholders by
repurchasing approximately 3.5 million common shares. We also
aggressively pursued, and continue to pursue, opportunities to
reduce expenses, which should help our fiscal 2023 results."
Financial Results
Financial
Results
|
For the three months
ended
|
For the year
ended
|
December
31
|
December
31
|
(thousands of U.S.
dollars, except
per share amounts and where
otherwise noted)
|
2022
|
% change
|
2021
|
2022
|
% change
|
2021
|
Facility service
revenue
|
119,434
|
7.9 %
|
110,677
|
424,551
|
6.5 %
|
398,633
|
Government stimulus
income
(costs)
|
(12,335)
|
(314.8 %)
|
5,742
|
(10,162)
|
(177.6 %)
|
13,099
|
Total revenue and other
income
|
107,099
|
(8.0 %)
|
116,419
|
414,389
|
0.6 %
|
411,732
|
Consolidated operating
expenses
|
113,726
|
25.1 %
|
90,917
|
379,450
|
13.5 %
|
334,374
|
Income (loss) from
operations
|
(6,627)
|
(126.0 %)
|
25,502
|
34,939
|
(54.8 %)
|
77,358
|
Finance costs (net
interest
expense)
|
1,668
|
15.9 %
|
1,439
|
5,731
|
(5.5 %)
|
6,064
|
Finance costs (changes
in values
of derivative instruments and
gain/loss on foreign currency)
|
(9,098)
|
(681.7 %)
|
1,564
|
(859)
|
(104.2 %)
|
20,280
|
Impairment loss (gain)
on loan
receivable
|
(1,394)
|
(100.0 %)
|
-
|
11,990
|
100.0 %
|
-
|
Share of equity loss
(income) in
associates
|
303
|
2,625.0 %
|
(12)
|
574
|
359.2 %
|
125
|
Income tax
expense
|
5,231
|
225.3 %
|
1,608
|
5,208
|
18.5 %
|
4,396
|
Net income
(loss)2
|
(3,337)
|
(116.0 %)
|
20,903
|
12,295
|
(73.6 %)
|
46,493
|
Earnings (loss) per
share
|
|
|
|
|
|
|
Basic
|
(0.08)
|
(124.2 %)
|
0.33
|
(0.15)
|
(130.0 %)
|
0.50
|
Diluted
|
(0.26)
|
(181.3 %)
|
0.32
|
(0.15)
|
(130.0 %)
|
0.50
|
Reconciliation of
Net Income
(Loss) to EBITDA1 and Adjusted
EBITDA
|
For the three months
ended
December
31
|
For the year
ended
December
31
|
(thousands of U.S.
dollars, except
where otherwise noted)
|
2022
|
% change
|
2021
|
2022
|
% change
|
2021
|
Net income
(loss)
|
(3,337)
|
(116.0 %)
|
20,903
|
12,295
|
(73.6 %)
|
46,493
|
Income tax
expense
|
5,231
|
225.3 %
|
1,608
|
5,208
|
18.5 %
|
4,396
|
Share of equity loss
(income)
in associates
|
303
|
2,625.0 %
|
(12)
|
574
|
359.2 %
|
125
|
Finance costs
(income)
|
(8,824)
|
(393.8 %)
|
3,003
|
16,862
|
(36.0 %)
|
26,344
|
Depreciation and
amortization
|
5,359
|
(16.9 %)
|
6,451
|
20,763
|
(22.4 %)
|
26,769
|
EBITDA
|
(1,268)
|
(104.0 %)
|
31,953
|
55,702
|
(46.5 %)
|
104,127
|
Impairment of
goodwill, other
intangibles and equipment
|
16,549
|
100.0 %
|
-
|
16,549
|
100.0 %
|
-
|
Adjusted
EBITDA
|
15,281
|
(52.2 %)
|
31,953
|
72,251
|
(30.6 %)
|
104,127
|
Distributable Cash
Flow
|
For the three months
ended
|
For the year
ended
|
December
31
|
December
31
|
(thousands of
dollars, except per
share amounts and where otherwise
noted)
|
2022
|
% change
|
2021
|
2022
|
% change
|
2021
|
Cash available for
distribution1 (C$)
|
9,900
|
(32.4 %)
|
14,650
|
27,536
|
(26.5 %)
|
37,448
|
Distributions
(C$)
|
2,086
|
(15.9 %)
|
2,479
|
9,302
|
3.2 %
|
9,011
|
Distributions per
common share (C$)
|
0.077
|
(3.8 %)
|
0.080
|
0.317
|
9.3 %
|
0.290
|
Payout
ratio1
|
21.2 %
|
25.4 %
|
16.9 %
|
33.8 %
|
40.2 %
|
24.1 %
|
On December 29, 2022, the
Corporation sold its remaining 31.7% non-controlling ownership
interest in UMASH for proceeds of $0.6
million, recording a pre-tax gain of $0.3 million in general and administrative
expenses. Along with the sale of its equity interests, the
Corporation also completed the full and final settlement of the
loan receivable from UMASH for proceeds of $1.4 million, and, in connection with this
transaction, recorded an impairment gain of the same amount on the
loan receivable during the three months ended December 31, 2022, resulting in a net impairment
loss of $12.0 million on the loan
receivable for the year ended December 31,
2022.
Due to the denial and additional review of certain PPP loan
forgiveness applications by the U.S. Small Business Administration
("SBA") in 2022, the Corporation no longer has reasonable assurance
of meeting the forgiveness requirements for loans totaling
$12.3 million. As a result, this
amount has been reversed from government stimulus income for year
ended December 31, 2022, and recorded
as a liability under payor advances and government stimulus funds
repayable as at December 31, 2022.
There remains uncertainty over the final outcome as forgiveness
applications for these PPP loans have not yet been definitively
resolved. Management plans to vigorously pursue all reasonably
available channels for reversing any denials. Any loans
subsequently forgiven will result in a recognition of income and a
reversal of the corresponding liability.
During the quarter, the Corporation purchased and cancelled
3,053,097 of its common shares at an aggregate purchase price of
$25.5 million under a substantial
issuer bid, and 433,300 of its common shares at an aggregate
purchase price of $2.5 million under
its normal course issuer bid programs.
During the quarter, MFC paid a quarterly cash dividend of
C$0.0805 per common share (or
C$0.322 per share on an annualized
basis), which represented an annualized yield of 4.00% on the
December 31, 2022, closing price of
C$8.04 per common share.
On December 31, 2022, MFC had
consolidated net working capital of $32.5
million, compared to $60.9
million on December 31,
2021.
MFC's financial statements and management's discussion and
analysis, for the three-month and twelve-month periods ended
December 31, 2022, will be filed on
SEDAR at www.sedar.com on Thursday, March 9, 2023, and will
also be available on Medical Facilities' website at
www.medicalfacilitiescorp.ca.
Notice of Conference Call
Management of MFC will host a conference call today,
March 9, 2023, at
8:30 am ET to discuss its fourth quarter financial
results. All interested parties may join the conference call by
dialing 416-764-8650 or 1-888-664-6383 approximately 15 minutes
prior to the call to secure a line. To join the conference call
without operator assistance, you may register and enter your phone
number at https://emportal.ink/40SO72D to receive an instant
automated call back.
A live audio webcast of the call will be available at
https://bit.ly/MFC2022Q4. Please connect at least 15 minutes prior
to the conference call to ensure adequate time for any software
download that may be required to join the webcast. The webcast will
be archived on MFC's website following the call date.
About Medical Facilities
Medical Facilities, in partnership with physicians, owns a
diverse portfolio of highly rated, high-quality surgical facilities
in the United States. MFC's
ownership includes controlling interest in four specialty surgical
hospitals located in Arkansas,
Oklahoma, and South Dakota, and an ambulatory surgery center
("ASC") located in California. In
addition, through a partnership with NueHealth LLC, Medical
Facilities owns a controlling interest in five ambulatory surgery
centers located in Michigan,
Missouri, Nebraska, Ohio, and Pennsylvania. MFC also owns a non-controlling
interest in an ASC in Missouri.
The specialty surgical 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 ASCs specialize in outpatient surgical
procedures, with patient stays of less than 24 hours. 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 EBITDA, adjusted EBITDA,
cash available for distribution and payout ratio are non-IFRS
financial 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 financial measures, including a
reconciliation of each of these non-IFRS financial 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.
|
2 Net Income (Loss) is
attributable to the owners of the Corporation and the
non-controlling interest holders.
|
|
SOURCE Medical Facilities Corporation