MEDICAL FACILITIES CORPORATION September 2013

Transcription

1 MEDICAL FACILITIES CORPORATION September 2013

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 COMPANY OVERVIEW Majority ownership in five specialty surgical hospitals and one ambulatory surgery center High dividend-yield stock (TSX: DR) Current yield: 7.4% Market Cap: C$477 Million Strong, stable cash flow

4 MFC FACILITY REVENUE MODEL Facility Fee MFC FACILITY 51 % 49 % MFC SURGEON- OWNERS PAYOR Public, Private Insurance, Self Pay Professional Fees ANESTHESIA Private Anesthesia LLC SURGEON Private Surgeon LLC 4

5 INDUSTRY BACKGROUND Inpatient Outpatient Care requires overnight stay Sample Procedures Total joint replacements Lumbar fusions Anterior cervical fusions Patient leaves facility on same day Sample Procedures Pain treatment Colonoscopy Ear, nose, throat Knee scope 5

6 INDUSTRY BACKGROUND U.S. SURGICAL FACILITIES Generic Hospital Sioux falls exterior picture Traditional Hospitals Specialty Surgical Hospitals (SSHs) Ambulatory Surgical Centers (ASCs) Full-service hospital (diagnostic & surgical) Inpatient and outpatient Over 60% are not-for-profit Most specialize in orthopaedics, spine, ENT Inpatient and outpatient ~ 300 SSHs Outpatient only > 6,000 ASCs 6

7 SUPERIOR OPERATIONS Traditional MFC Hospitals Day-to-day operations run by Administration Physicians Types of surgeries performed Emergency & elective Only elective Admissions & scheduling Emergency & elective Predictable & certain Average operating room turnaround time Average patient time in post-op care 60 min 7 min 7 days Hours - 1 day 7

8 MFC S STAKEHOLDERS Patient Surgeon Highest quality care Hotel-like environment Extraordinary customer service Predictable scheduling Ownership stake Increased productivity Improved professional income Involvement in management Payor Investor Competitive rates Efficient billing procedures Stable, secure income High-yielding investment 8

9 HEALTHCARE AND HOSPITALITY

10 HEALTHCARE AND HOSPITALITY HOTEL-INSPIRED ENVIRONMENT

11 HEALTHCARE AND HOSPITALITY LEADING-EDGE FACILITIES

12 OUTLOOK AND GROWTH STRATEGY

13 Population INDUSTRY DRIVERS AND OTHER FACTORS Under 45 years 45 to 64 years 65 years and over National Health Expenditure (US$ billion) (millions) 400 (US$ billion) 5,000 Increased demand for surgical services Overall population growth ,000 3,000 2,000 1,000 National Health Expenditure Aging population Expanded coverage under healthcare reform Specialty hospitals: consistent higher quality and patient satisfaction ratings. Healthcare reform may pose some challenges, uncertainties, and opportunities ~300 specialty hospitals grandfathered provide acquisition opportunities E 2020E 0 But specialty hospitals that survive will be stronger 1 Source: U.S. Census Bureau, 2010 based on National Population Projections 2008; 2015 & 2020 based on National Population Projections Source: Centers for Medicare & Medicaid Services, National Health Expenditure Projections

14 GROWTH BY BUILDING OUR BRAND URGENT CARE + PRIMARY CARE SPECIALIST PATIENT MFC SPECIALTY HOSPITALS IMAGING Surgery Pain Management 14

15 THROUGH URGENT/PRIMARY CARE

16 SELECTIVE ACQUISITIONS Change pic to something less similar Accretive metrics Strong operating performance Balanced composition of physicians Attractive markets (demographics, location) 16

17 FINANCIAL REVIEW

18 MFC PAYOR MIX 2012 Medicare/ Medicaid Blue Cross/ Blue Shield Workers Compensation Other Private Insurance and Self-pay 27.0% 16.9% 25.9% 13.3% 28.7% 27.4% 18.1% 42.6% GROSS BILLINGS NET REVENUE 18

19 STRONG FINANCIAL POSITION Q (US$ millions) Current Assets Cash & Cash Equivalents Other Current Assets $26.7 $71.7 $43.6 $41.2 $119.5 Long-term Debt (including current portion) Convertible Debentures Other Liabilities Total Liabilities Non-Current Assets $321.4 $215.6 Total Equity 2.6x Current Ratio 52.0% Net Debt/Equity 2.17x Subsidiary Debt Coverage (LTM) * 7.5% Convertible Debentures with approximately C$38.5 million principal amount outstanding as of March 28, 2013 expired on April 30,

20 OPERATING RESULTS (US$ millions, except where noted otherwise) Q Q YTD 2013 YTD 2012 REVENUE $73.7 $54.3 $146.6 $113.2 INCOME FROM OPERATIONS* $20.8 $17.5 $41.2 $39.4 OPERATING MARGIN 28.3% 32.2% 28.1% 34.8% CASH AVAILABLE FOR DISTRIBUTION (C$ MILLIONS) $9.4 $9.2 $18.0 $19.0 PAYOUT RATIO 93.8% 85.1% 93.0% 82.0% * Income from operations before amortization of intangibles, interest expense, gains or losses on foreign currency translation, and non-controlling interest 20

21 STRONG CASH FLOW Distributions Cash Available for Distribution (including realized gains/losses on FX forward contracts) Cash Available for Distribution (Excluding realized gains/losses on FX forward contracts) (C$ millions) % 2012 PAYOUT RATIO* Payout Ratio* 79.3% 82.6% 82.5% 92.3% 83.3% *Including realized gains/losses of FX forward contracts 21

22 INVESTMENT HIGHLIGHTS HIGH-YIELD INVESTMENT (~8%) ATTRACTIVE MARKETS WITH STRONG ECONOMIES STABLE CASH FLOW HIGHLY-RATED, HIGH-QUALITY FACILITIES FAVORABLE INDUSTRY GROWTH DRIVERS EXPERIENCED MANAGEMENT TEAM AND BOARD 22

23 CORPORATE INFORMATION

24 MANAGEMENT TEAM Dr. Donald Schellpfeffer Chief Executive Officer Dr. Schellpfeffer has been the Medical Director of Sioux Falls Specialty Hospital and a member of the hospital s management committee since he co-founded it in He has over 27 years of experience in ambulatory surgical environments, and over 30 years in general, cardiovascular, and trauma practices. He has authored numerous medical publications. Michael Salter Chief Financial Officer Michael Salter has been CFO of Medical Facilities since February Mr. Salter has held numerous financial management positions in a variety of Canadian and U.S. based companies involved in the oil and gas, manufacturing, and hospitality industries and has served as a Trustee of HealthLease Properties REIT (TSX: HLP.UN) since June Mr. Salter is a Chartered Accountant and received his CPA certification in

25 BOARD OF DIRECTORS Seymour Temkin, CA Chairman Marilynne Day-Linton, CA Corporate Director Alan Dilworth, FCA Corporate Director Dr. Gil Faclier Director of Chronic Pain Management Program and Consultant Anaesthesiologist, Sunnybrook Health Sciences Centre Irving Gerstein Member, Senate of Canada John Perri Partner, Dorchester Capital, LLC Dr. Donald Schellpfeffer CEO, Medical Facilities Corporation 25

26 FACILITIES Sioux Falls Specialty Hospital Sioux Falls, SD 76,000 square feet 13 operating rooms 35 overnight rooms Black Hills Surgical Hospital Rapid City, SD 75,000 square feet 11 operating rooms 26 overnight rooms Dakota Plains Surgical Center Aberdeen, SD 19,000 square feet 3 operating rooms 15 overnight rooms Oklahoma Spine Hospital Oklahoma, OK 61,000 square feet 7 operating rooms 25 overnight rooms Arkansas Surgical Hospital North Little Rock, AR 126,000 square feet 9 operating rooms 41 overnight rooms (51 licensed beds) The Surgery Center of Newport Coast Newport Beach, CA 7,000 square feet 3 operating rooms

27 MEDICAL FACILITIES CORPORATION September