Fubotv earnings beat by $0.10, revenue topped estimates
Medical Facilities Corporation (MFC) reported its second-quarter earnings for 2025, revealing a miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $0.20, falling short of the expected $0.26, marking a surprise of -23.08%. Revenue came in at $80.56 million, below the forecasted $82.5 million, a shortfall of 2.35%. Following the announcement, the stock price dropped by 5.94% in pre-market trading, reflecting investor disappointment. According to InvestingPro data, MFC maintains strong fundamentals with a healthy 38.9% gross profit margin and an impressive return on assets of 33.2%.
Key Takeaways
- EPS and revenue missed analyst expectations, with a notable EPS surprise of -23.08%.
- The company’s stock fell by nearly 6% in pre-market trading.
- Operational challenges in Sioux Falls significantly impacted financial results.
- New credit facility established to support future growth initiatives.
Company Performance
Medical Facilities faced a challenging quarter with a decrease in facility service revenue by 1.3% to $80.6 million. Excluding the underperformance at Sioux Falls, revenue actually increased by 6.5%, indicating positive underlying trends in other areas. Income from operations also saw a decline, dropping 5% to approximately $12 million, although it surged by 98.9% when Sioux Falls was excluded. These figures highlight the significant impact of Sioux Falls on the overall performance.
Financial Highlights
- Revenue: $80.6 million, down 1.3% year-over-year.
- Earnings per share: $0.20, compared to a forecast of $0.26.
- EBITDA: $16 million, a decrease of 4.7% from the previous year.
- Cash and cash equivalents: $49 million, down from $108.5 million in 2024.
Earnings vs. Forecast
The company fell short of expectations with an EPS of $0.20 against a forecast of $0.26, resulting in a negative surprise of 23.08%. Revenue also missed analysts’ predictions, coming in at $80.56 million compared to the expected $82.5 million, a surprise of -2.35%. These misses are significant, especially the EPS shortfall, which reflects operational and market challenges.
Market Reaction
Following the earnings announcement, Medical Facilities’ stock dropped by 5.94% in pre-market trading, a reaction to the disappointing financial results. The stock’s last close was at $14.99, and it now trades significantly lower, approaching its 52-week low of $12.98. This decline reflects broader investor concerns about the company’s ability to meet financial targets. InvestingPro analysis suggests the stock is currently undervalued, with a strong free cash flow yield of 33% and an attractive P/E ratio of 7.9x. Additionally, the company has maintained dividend payments for 22 consecutive years, demonstrating long-term financial stability.
Outlook & Guidance
Looking forward, Medical Facilities anticipates a normalization of operations at Sioux Falls in the second half of the year. The company has secured a new $40 million credit facility with CIBC, with the option to increase it by up to $25 million, indicating a focus on future growth and stability. However, potential Medicaid changes are not expected to impact the business until 2027 or early 2028. InvestingPro data reveals the company operates with a moderate debt-to-equity ratio of 0.88 and maintains a strong Altman Z-Score of 3.6, indicating solid financial health. For deeper insights into MFC’s financial metrics and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Executive Commentary
"We continued our focus on improving operating performance and returning capital to shareholders," stated Jason Redman, President and CEO. David Watson, CFO, highlighted that "Medicaid really represents an immaterial portion of our business," addressing potential reimbursement concerns. Redman also expressed optimism about Sioux Falls, noting, "We look forward to Sioux Falls’ return to more normalized operations in the back half of the year."
Risks and Challenges
- Operational challenges at Sioux Falls significantly affecting financial results.
- Competitive pressures in the Arkansas market.
- Potential changes in Medicaid reimbursement policies.
- Declining cash reserves, down to $49 million from $108.5 million last year.
- Legislative uncertainties regarding site neutrality.
Q&A
During the earnings call, analysts inquired about the revenue impact of Sioux Falls, the competitive landscape in Arkansas, and potential reimbursement risks. Management provided detailed responses, emphasizing ongoing efforts to address these challenges and improve operational performance.
Full transcript - Medical Facilities Corporation (DR) Q2 2025:
Conference Operator: Morning, everyone. Welcome to Medical Facilities Corporation’s twenty twenty five Second 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.
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 except as required by applicable law. Such statements speak only as of the date made. I would now like to turn the meeting over to Mr.
Jason Redman, President and CEO of Medical Facilities. Please go ahead, Mr. Redman.
Jason Redman, President and CEO, Medical Facilities Corporation: Thank you, operator, and good morning, everyone. On the call with me is our Chief Financial Officer, David Watson. This morning we reported our second quarter results. Our news release, financial statements and MD and A are available on our website and have been filed on SEDAR plus As usual, please note that all dollar amounts that fall are in U. S.
Dollars, unless otherwise specified. During the second quarter, we continued our focus on improving operating performance and returning capital to shareholders. Unfortunately, our consolidated results were negatively impacted by the headwinds at Sioux Falls Specialty Hospital. The relocation of the primary physician group’s clinic, which is the hospital’s largest orthopedic referral base, impacted surgical case volume, along with case and payer mix in the quarter. In particular, the case mix at the hospital reflected fewer complex surgical cases, partially offset by an increase in lower acuity cases.
Although this affected both facility service revenue and income from operations for the quarter, we look forward to Sioux Falls’ return to more normalized operations in the back half of the year. In addition, I’m pleased to call out that Sioux Falls continues to be recognized as best in class. In May, Sioux Falls was one of just 66 hospitals across The United States and one of only two in South Dakota to receive both the twenty twenty five Outstanding Patient Experience and Patient Safety Excellence Awards from Healthgrades. This was the third year in a row for Sioux Falls and is a testament to the exceptional care delivered by our dedicated partners, and we couldn’t be prouder of this recognition. Elsewhere, our other hospitals made strong contributions in the quarter and year to date, delivering improved profitability on the back of higher volumes, favorable case and payer mix, and payer rate increases.
On the capital allocation side, we returned $6,900,000 to shareholders through the repurchase of 609,100 common shares in the quarter under a normal course issuer bid. In the first six months of the year, including our normal course issuer bid and our substantial issuer bid, we repurchased approximately 4,200,000.0 shares, returning $52,200,000 to shareholders and reducing our outstanding shares by 18%. And lastly, subsequent to quarter end, we finalized a new three year $40,000,000 credit agreement with CIBC on favorable terms. This agreement provides us with enhanced flexibility as it includes an option to increase the credit facility by up to $25,000,000 subject to certain conditions being met. With that, I would now like to turn the call over to David to review our financial results for the quarter.
David?
David Watson, Chief Financial Officer, Medical Facilities Corporation: Thank you, Jason. Good morning, everyone. Please note that the income statement variances I will be discussing this morning are for continuing operations and exclude Black Hills Surgical Hospital, which was treated as discontinued operations financial results for the three and six months ended 06/30/2024. Facility service revenue for the quarter was down 1.3% to $80,600,000 with the decrease being attributable to the headwinds at Sioux Falls as Jason already discussed. Excluding Sioux Falls, facility service revenue increased 6.5% as our other hospitals contributed higher volumes and benefited from negotiated payer rate increases and favorable case and payer mix.
Surgical case volumes were down 0.9%. However, when you exclude Sioux Falls, they were up marginally or 0.1%. Overall inpatient cases were down 8.6%, and observation cases decreased by 1.8, while outpatient cases increased by zero point seven percent. Pain management cases were down four point five percent compared to the same period last year, mainly due to a decline at Arkansas Surgical Hospital following the departure of a pain doctor in Q4 twenty twenty four. However, the recruiting process at IASH remains strong, with a new pain doctor beginning this month, in addition to a new spine surgeon joining a referral groups practice in September 2025.
Total operating expenses were down $05,000,000 as higher consolidated salaries and benefits were more than offset by reductions to drugs and supplies and G and A expenses. Consolidated salaries and benefits were up 3.9%, mainly due to annual merit increases, market wage pressures, and higher benefit costs from increased health plan utilization. This increase was partially offset by a corresponding reduction in salaried physicians, with one of the formerly employed physicians opting to become a full owner. Drugs and supplies were down 2.4%, reflecting the lower surgical case volume and lower acuity procedures in the quarter, as well as the improved cost savings at certain facilities. Finally, G and A expenses were down 3.4%, mainly due to lower corporate level costs related to share based compensation plans, as well as lower contracted service costs.
These decreases were partially offset by higher professional fees and various other facility related expenses. Looking at our profitability for the quarter, income from operations was down 5% to just shy of $12,000,000 However, when excluding Sioux Falls, income from operations was up 98.9%. EBITDA for the quarter was $16,000,000 which was down 4.7% from the prior year period. Turning to our balance sheet, at quarter end consolidated net working capital stood at $36,600,000 with cash and cash equivalents totaling $49,000,000 This compares to net working capital of $76,400,000 and cash and cash equivalents of $108,500,000 at the 2024. The decline in consolidated net working capital was primarily driven by the completion of substantial issuer bid in March, which reduced cash and cash equivalents by $43,700,000 Other significant drivers with a 14,400,000 tax payment in April related to the gain on the sale of Black Hills Surgical Hospital and repurchasing $9,000,000 worth of shares under our normal course issuer bid.
We continue to have no corporate level bank debt after retiring the balance on our corporate credit facility near the end of last year. As Jason highlighted, on August 6, we executed a new credit agreement with Canadian Imperial Bank of Commerce for a $40,000,000 revolving credit facility that matures on 08/04/2028. The agreement includes an option to increase the facility by up to $25,000,000 contingent upon meeting specified conditions. The agreement supersedes our previous $50,000,000 credit agreement with National Bank. The facility is secured through general security agreements, securities pledge agreements, and guarantees issued by MSC and each of its wholly owned subsidiaries.
This concludes our prepared remarks. We’d now like to open up the call for questions. Operator?
Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star two. If you’re using a speakerphone, please lift the handset before pressing any keys.
Your first question comes from Tahil Dhingra of RBC. Your line is already open.
Sahil Dhingra, Analyst, RBC: Hi, good morning. This is Sahil for Doug. Thank you for taking my questions. My first question is on the impact at Sioux Falls. Can you quantify how much the impact was?
David Watson, Chief Financial Officer, Medical Facilities Corporation: Yeah. Hi, Suhil. Thanks for the question. You know, If you look at the impact just on the revenue overall, was certainly down about $3,900,000 for the quarter. And it’s really driven by the combination of the case and payer mix predominantly driven by a decrease in the higher acuity cases.
Sahil Dhingra, Analyst, RBC: Okay. And do you anticipate some impact in Q3 as well before fully normalizing?
David Watson, Chief Financial Officer, Medical Facilities Corporation: No,
Jason Redman, President and CEO, Medical Facilities Corporation: I think at this point in time, we think that the relocation impact is behind us. And most of that was felt in the early part of the quarter. Obviously, when transfer you a clinic that’s been in operation for over twenty years since a new facility and impacting almost, oh, in excess of 20 physicians, had a significant impact in the quarter, but that impact is primarily behind us now.
Sahil Dhingra, Analyst, RBC: Okay. Okay. That is helpful. And then in terms of this new credit facility, can you elaborate a bit more on, like, you repeat the previous credit facility? Why are we what is the need for the new credit facility is what I’m trying to ask?
David Watson, Chief Financial Officer, Medical Facilities Corporation: So the current credit facility was expiring at the end of this month. So we needed to either renew or replace that credit facility. So it’s really just making sure that we’ve got adequate access to capital with the continuing line.
Sahil Dhingra, Analyst, RBC: Okay. Okay. Great. And then I have a few more. I’ll lump them together.
One is if you can provide us an update on the competition. And the second one I have is on the any risks that you’re monitoring as it relates to reimbursement under the current administration? And I’ll leave it there. Thank you.
Jason Redman, President and CEO, Medical Facilities Corporation: Yes, let me so in competition, is there any specific market, Sahil, that you’re referring to?
Sahil Dhingra, Analyst, RBC: Yeah, Arkansas. I was wondering more about that.
Jason Redman, President and CEO, Medical Facilities Corporation: Yeah, so in Arkansas, nothing, no impact that we’re seeing right now. That’s always been a very competitive market. We’ve had discussion before. We monitor closely with the St. Baskets and St.
Vincent and we haven’t seen any significant impact on operations. You’ll see the performance of ASH continues to improve, and it has an improvement over time and we continue to recruit doctors as David mentioned. So we haven’t seen any impact so far.
Sahil Dhingra, Analyst, RBC: Okay, great. And then any update on reimbursement that new risk that you’re currently monitoring?
David Watson, Chief Financial Officer, Medical Facilities Corporation: Yes, I assume your questions with respect to impacts on Medicaid. And I, you know, first off, I guess I’d say that the Medicaid ramifications have been pushed out to the ’27 or perhaps early twenty eight. It would be the earliest that those would actually take effect. And with respect to the impact on our business, Medicaid really represents an immaterial portion of our business. And that said, we’ll continue to monitor the situation closely and see how that evolves.
Sahil Dhingra, Analyst, RBC: And there is no update on that site neutrality legislation, correct?
David Watson, Chief Financial Officer, Medical Facilities Corporation: No, that’s correct. It’s a topic that’s been floated for a number of years, but we really haven’t seen significant move in all yet.
Sahil Dhingra, Analyst, RBC: Okay, great. Thank you again so much for taking my questions.
Jason Redman, President and CEO, Medical Facilities Corporation: Thank you.
Conference Operator: There are no further questions at this time. I would hand over the call to Jason Redman for closing remarks. Please go ahead.
Jason Redman, President and CEO, Medical Facilities Corporation: Thank you, operator, and thank you to everyone joining us this morning. We appreciate your continued support and look forward to updating you on our progress throughout the balance of the year. Have a great day.
Conference Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation, and you may now disconnect.
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