Medical Facilities Q3 2024 Earnings Report

Medical Facilities EPS Results

• Actual EPS: C$0.41
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: -C$0.01

Medical Facilities Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Medical Facilities Announcement Details

• Quarter: Q3 2024
• Date: 11/7/2024
• Time: Before Market Opens
• Conference Call Date: Thursday, November 7, 2024
• Conference Call Time: 8:30AM ET

Medical Facilities (TSE:DR) Corp owns a diverse portfolio of surgical facilities in the United States. Through its wholly-owned subsidiaries, the company owns controlling interests in four specialty hospitals and six ambulatory surgery centers. The hospitals offer a range of non-emergency surgical, imaging, diagnostic and pain management procedures, and other ancillary services. Its key revenue source is from the facility service income. The corporation's operations are based in the United States.

Medical Facilities Q3 2024 Earnings Call Transcript

[Operator]

Good morning, everyone. Welcome to Medical Facilities Corporation's 2024 Third Quarter Earnings Call. After management's remarks, this call will include a question and answer session whereby qualified equity analysts will be permitted to ask questions. Before turning the call over to management, listeners are reminded that today's call may contain forward looking statements within the meaning of the Safe Harbor provisions of Canadian Provincial Securities Laws. Forward looking statements involve risks and uncertainties and undue reliance should not be placed on such statements.

[Operator]

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. For additional information, please consult the MD and A for this quarter, the Risk Factors section of the annual information form and Medical Facilities' other filings with Canadian Securities Regulators. Medical Facilities does not undertake to update any forward looking statements. Such statements speak only as of the date made. I would now like to turn the meeting over to Mr.

[Operator]

Jason Redmond, President and CEO of Medical Facilities. Please go ahead, Mr. Redmond.

[Speaker 1]

Thank you, operator, and good morning, everyone. With me on the call is our Chief Financial Officer, David Watson. Earlier this morning, we reported our Q3 results. Our news release, financial statements and MD and A are available on our website and have been filed on SEDAR Plus. Please note that the income statement variances discussed by David and I this morning will exclude the results from our divested MSC Nueterra ASCs and non controllable non cash corporate level charges related to share based compensation plans.

[Speaker 1]

We had a solid Q3 characterized by an increased number of surgical cases and net decrease in operating expenses and the return of additional capital to shareholders. But the big story for the quarter was that the U. S. Small Business Administration completed its post payment loan reviews and confirmed full forgiveness in all outstanding PPP loans. As a result, we recognized government stimulus income of $11,400,000 during the quarter.

[Speaker 1]

The corresponding liability on the government stimulus funds repayable was also reversed in the balance sheet. Thanks largely to the recognition of government stimulus income, total revenue and other income for the quarter increased by $11,600,000 or 11.2 percent to $115,000,000 Facility service revenue was essentially flat at approximately $103,600,000 in the quarter. Importantly, even when excluding the government's seamless income, our income from operations increased 11.7 percent to $14,200,000 and EBITDA was up 8.3 percent to $19,100,000 On the NCIB front, we repurchased 554,900 shares in the quarter and 1,230,600 shares over the 1st 9 months of the year, thereby returning $5,700,000 $11,300,000 to the shareholders in those respective periods. Additionally, we continue to reduce our corporate debt, lowering the balance in our credit facility by a further $2,000,000 for the quarter, making it a $12,000,000 decrease over the 1st 9 months and resulted in an outstanding balance of only $4,000,000 at quarter end. Before turning things over to David, I wanted to give a big shout out to the team at Arkansas Surgical Hospital.

[Speaker 1]

During the quarter, ASH was ranked 1 of the top 10 hospitals in the U. S. For low readmission rates as measured by the hospital readmission reduction program by CMS. ASH was the only hospital in Arkansas to make that list. I would now like to turn the call over to David to review our financial results for the quarter.

[Speaker 1]

David?

[Speaker 2]

Thank you, Jason, and good morning, everyone. As usual, please note that all dollar amounts that follow are in U. S. Dollars. 3rd quarter facility service revenue increased $215,000 to $103,600,000 as higher surgical and pain management case volumes were partly offset by the combined impact of case and payer mix.

[Speaker 2]

Total surgical cases rose by 3.1 percent with observation cases up 13% and outpatient cases increasing by 6.5%, while inpatient cases declined by 22.1%. Pain management cases grew by 13.4%. Total operating expenses declined 1.1 percent to $90,000,000 with reductions in drugs and supplies, largely offset by increases in salaries and benefits and G and A expenses. Consolidated salaries and benefits rose by 4.5% as a result of higher clinical and non clinical salaries due to annual merit increases, full time equivalent increases, market wage pressures and higher physician salaries. This was partly offset by the impact of the sale of Black Hills Surgical Hospitals and Gillette Urgent Care Center back in April.

[Speaker 2]

We saw a 7.2% decrease in consolidated drugs and supplies, largely due to the impact of lower acuity cases in addition to improved cost savings at certain facilities. Consolidated G and A expenses were essentially flat year over year. And as Jason mentioned earlier, income from operations was up 11 point 7% to $14,200,000 in the quarter and EBITDA increased by 8.3 percent to $19,100,000 Looking at our balance sheet, at the end of the quarter, we had consolidated net working capital of $11,400,000 and cash and cash equivalents of $18,700,000 compared to net working capital of $19,800,000 and cash and cash equivalents of $24,100,000 at year end. The decreases in net working capital and cash and cash equivalents are the result of the continuing return of capital to shareholders through dividends and NCIB share purchases, along with further reductions in corporate debt. In the 1st 9 months of the year, we paid $4,500,000 in dividends, reduced our corporate credit facility's outstanding balance by $12,000,000 and returned $11,300,000 to shareholders by repurchasing a little over 1,200,000 common shares under the NCIB.

[Speaker 2]

This concludes our prepared remarks. We'd now like to open up the call for questions. Operator?

[Operator]

Thank you. We do not have any questions at this time. Presenters, please continue.

[Speaker 1]

Thank you, operator, and thank you all for joining us this morning. We look forward to sharing more updates with you next quarter.

[Operator]

This concludes today's stock conference call. Thank you for your participation. You may now disconnect.