Investor Presentation June 2008

Transcription

1 Investor Presentation June 2008

2 Forward-Looking Statements This presentation may contain forward-looking statements within the meaning of certain securities laws, including the safe harbour provisions of the Securities Act (Ontario) and other provincial securities law in Canada. These forward-looking statements include, among others, statements with respect to our objectives, goals and strategies to achieve those objectives and goals, as well as statements with respect to our beliefs, plans, objectives, expectations, anticipations, estimates and intentions. The words may, will, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and continue (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these forward-looking statements. For more information on the risk factors related to these forward-looking statements, please refer to the management discussion and analysis section of Medical Facilities Corp. s AIF, Annual Report and ongoing quarterly filings. 2

3 Capital Market Profile Toronto Stock Exchange Conversion to IPS structure* Units O/S (basic) Recent price (June 2, 2008) 52-week high / low Market capitalization (approx.) Annualized distribution per unit Current yield FY 2007 Revenue DR.UN March 29, million C$10.30 C$9.55 / C$12.96 C$299.7 million C$ % (approx.) US$168.8 M * Corporate structure, not a unit trust; IPS represents one common share + C$5.90 par value of 12.5% subordinated notes 3

4 Company Overview Majority interests in four specialty surgical hospitals in South Dakota and Oklahoma and two ambulatory surgery centers ( ASCs ) in California Specialty hospitals provide (non-emergency) outpatient and inpatient surgeries, imaging and diagnostic procedures ASCs specialize in outpatient surgical procedures, with patient stays of less than 24 hours Minority interests (~49%) held by practicing physicians All revenue derived from facility fees in U.S. (all U.S. income) 4

5 MFC Locations 5

6 Recent Events Facility Expansion Sioux Falls Surgical Center US$11 million facility expansion Number of overnight stay beds will increase to 22 from 13 C$43.0 million Convertible Debt Financing 7.5% 5-year convertible secured debentures Conversion price: C$13.10 / IPS Unit Maturity Date: April 30, 2013 Trades on TSX under symbol "DR.DB" 6

7 U.S. Surgical Facilities Traditional Hospitals Full service facilities, emergency, intensive care, imaging, etc. 60% plus of hospitals not-for-profit Ambulatory Surgery Centers ( ASC ) Specialized facilities that only perform planned outpatient surgical procedures > 6,000 centers Specialty Surgical Hospitals ( SSH ) Licensed to perform both inpatient and outpatient surgeries Most specialize in cardiac care, orthopaedics and general surgery ~160 centers 7

8 MFC Specialty Surgical Hospitals Black Hills Dakota Plains Sioux Falls Oklahoma Spine Location Rapid City, SD Aberdeen, SD Sioux Falls, SD Oklahoma City, OK Size 50,000 ft 2 13,000 ft 2 49,000 ft 2 * 61,000 ft 2 Primary Specialties Neurosurgery Orthopaedics Orthopaedics Orthopaedics E.N.T Pain Management Neurosurgery Orthopaedics Operating Rooms Overnight Rooms * 18 * Currently undergoing expansion to increase overnight stay rooms to 22; size (ft 2 ) does not include this additional space 8

9 MFC ASCs Location Barranca Irvine, CA Newport Coast Newport Beach, CA Size Primary Specialties Operating / Procedure Rooms 5,000 ft 2 Ophthalmology, Gastroenterology E.N.T. 2 / 1 7,000 ft 2 Gastroenterology Gynecology Orthopedics Pain Management Plastic Surgery 2 / 1 9

10 MFC Offers Stakeholder Benefits patient Hotel-like environment at specialty surgical hospitals Enhanced patient experience Convenient & flexible scheduling surgeon payor Increased productivity Improved professional income Ownership stake Greater influence over facility s operations Best-in-class healthcare services Competitive rates Efficient billing procedures 10

11 Superior Operations Day-to-day operations run by physician-based management committee Small number of specializations Greater control over admissions and flexibility in scheduling due to lack of emergency department Average patient time in postoperative care in specialty surgical hospitals is 1-2 days Average hospital operating room turnaround times MFC Specialty Surgical Hospitals: 10-15min. Traditional Hospitals: 60min. 11

12 Specialty Surgical Hospital 2007 Revenue Model & Payor Mix 3% Medicaid (federal-state program for low-income individuals) 29% Other Private Insurance 24% Blue Cross / Blue Shield 18% Workers Compensation 24% Medicare (federal program for age 65+) 2% Self Pay Patient 2% Payor 98% 12

13 Financial Review Financial Review 13

14 Q1 08 Financial Summary (US$ 000s, except where noted otherwise) Revenue Operating Income * Operating Margin Cash Available for Distributions C$ Total Distributions C$ ** Payout Ratio 3 mos. ended March 31, ,374 19, % 9,744 7, % 3 mos. ended March 31, ,158 17, % 9,679 7, % * Operating income before depreciation and amortization, interest expense, loss on foreign currency translation and minority interest ** Includes both interest on subordinated notes and dividends on common shares 14

15 Distributable Cash & Distributions C$ millions 12 Payout ratio 100% % 90% 6 85% 4 80% 2 75% 0 Q1 07 Q2 07 Q3 07 Q4 07 Q % Generated C$ Distributed C$ Payout ratio 15

16 Hedged vs. Non-Hedged CAFD C$ / IPS Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 CAFD hedged CAFD unhedged 16

17 Hedged vs. Non-Hedged Payout Ratio 115% 110% 105% 100% 95% 90% 85% 80% 75% Payout ratio 70% Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Hedged Un-Hedged 17

18 Steady Cash Flow US$ Cash Available for Distribution ( CAFD ) per IPS unit, before hedges US$ / IPS Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q

19 Balance Sheet (US$ 000s) Cash and Cash Equivalents Current Assets Total Assets Current Liabilities Long-Term Debt less current maturities Total Equity March 31, ,443 62, ,723 48,896 20,794 38,811 Dec. 31, ,664 57, ,896 20,846 20,605 38,223 19

20 Market Overview Outlook & Growth Strategy 20

21 U.S. Healthcare Spending CAGR* 6.76% $trillions The U.S. is the largest market for healthcare services in the world * 09* 10* 11* 12* 13* 14* 15* 16* 17* * Forecasted figures ** Estimated CAGR from E Source: Centers for Medicare & Medicaid Services, Office of the Actuary: National Health Statistics Group; U.S. Department of Commerce, Bureau of Economic Analysis; and U.S. Bureau of the Census. 21

22 U.S. Population Trends Note: Pyramid graphs reflect the middle series of projected resident populations of the U.S. as of July and Source: National Projections Program, Population Division, U.S. Census Bureau 22

23 Growth in Outpatient Surgeries (U.S.) Total surgeries Outpatient surgeries millions of surgeries % 75% of all surgeries are outpatient % of all surgeries can be performed at MFC s specialty surgical hospitals * 03* 05* 07* * Forecasted figures Source: Triple Tree and SMG Marketing 23

24 Factors Driving Healthcare Spending Increased demand for surgery Growing population Aging population Enhanced diagnostic procedures Evolving technology Improved diagnosis of patient conditions Highly regulated environment Shift to outpatient surgeries Improved anesthesia, advancements in medical technologies and equipment, and Payor focus on containing costs 24

25 Growth in Ambulatory Surgery Centers (U.S.) # of centers 6,000 5,000 6,000+ 4, % 3,000 2,000 2,800 1, * Forecasted figures Source: Centers for Medicare & Medicaid Services 06* 25

26 ASC Market Ownership Structure Corporate Only 7% Hospital Only 3% Corporate-Hospital 2% Corporate-Physician 11% Hospital-Physician 16% Physician Only 61% Source: 2004 ASC Salary and Benefits Survey, Federated Ambulatory Surgery Association 26

27 Growth Strategy Attract and retain leading surgeons Increase physician complement Enhance operating efficiencies and capacity utilization Develop marketing programs directed at healthcare community (physicians, patients & payors) Introduction of new surgical and pain management procedures Expansion of existing facilities Accretive acquisitions: specialty surgical hospitals & ASCs 27

28 Summary High quality assets Highly skilled and dedicated personnel Large and growing market Strong, stable cash flow Focused growth strategy 28