Medical Facilities Q1 2026 Earnings Report

Medical Facilities EPS Results

• Actual EPS: C$1.42
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Medical Facilities Revenue Results

• Actual Revenue: $93.30 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Medical Facilities Announcement Details

• Quarter: Q1 2026
• Date: 5/7/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, May 7, 2026
• 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 Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Double‑digit operational growth — facility service revenue rose 10.8% to $67.1M, income from operations increased 17.6% to $12.8M, and EBITDA grew 13.8% to $15.7M.
• Positive Sentiment: Strategic divestiture and strong liquidity — the January sale of the 64% interest in Oklahoma Spine Hospital generated ~$46M gross and helped lift consolidated cash to $86.3M (corporate cash ~$78.1M), enabling share repurchases and potential further capital returns.
• Negative Sentiment: Rising operating costs — operating expenses increased ~9.3% (~$4.7M), driven mainly by drugs and supplies (+13.5%), higher salaries and benefits (+9.1%), and increased contracted anesthesia and physician guarantee costs.
• Neutral Sentiment: Mixed case mix and volume trends — total surgical cases down 0.6% due to a drop in low‑margin dental cases (ex‑dental surgical cases +1.3%); outpatient cases +2.6% while inpatient and observation cases declined, and pain management cases fell 21.6% as a new pain doctor ramps up.

Presentation

[Operator]

Hello. Good morning, everyone. Welcome to Medical Facilities Corporation's 2026 quarter earnings call. After the management's remarks, this call will include a question and answer session when qualified equity analysts may 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 law. Forward-looking statements involve risks and uncertainties. Undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements and may differ in actual material from those expressed or implied in such statements. For additional information, please consult the MD&A for this quarter, the Risk Factors section of the annual information form in Medical Facilities, other filings with Canadian securities regulators.

[Operator]

Medical Facilities does not undertake to update any forward-looking statements except as required by law. Such statements speak only as of date made. Now I would like to turn the meeting over to Mr. Jason Redman, President and CEO of Medical Facilities. Please go ahead, sir.

[Jason Redman, President and CEO at Medical Facilities]

Good morning, everyone. Thank you for joining us. On the call with me is the Chief Financial Officer, David Watson. Earlier this morning, we reported our first quarter results. Our news release, financial statements, and MD&A are available on our website and have been filed on SEDAR+. Before we begin, I'd like to point out that the income statement variances Dave and I will be discussing this morning relate only to continuing operations, and therefore exclude Oklahoma Spine Hospital and Newport Coast Surgery Center. The variances also exclude non-controllable, non-cash corporate-level charges related to share-based compensation plans. As usual, all dollar amounts are in US dollars unless otherwise specified. We had a positive and eventful start to the year. In the first quarter, we delivered double-digit % growth in facility service revenue, income from operations, and EBITDA.

[Jason Redman, President and CEO at Medical Facilities]

Our top line increased 10.8% to $67.1 million, thanks to a favorable payer mix as well as higher volumes of orthopedic and spine procedures. Our income from operations was up 17.6% to $12.8 million, and our EBITDA grew 13.8% to $15.7 million. We also continued our multi-year track record of returning capital to shareholders. During the quarter, we repurchased 318,400 common shares through our normal course issuer bid, returning $3.8 million to shareholders. In addition, as previously disclosed, the most significant development this quarter occurred in January when we completed the sale of our 64% ownership interest in Oklahoma Spine Hospital for gross cash proceeds of approximately $46 million, subject to customary adjustments.

[Jason Redman, President and CEO at Medical Facilities]

This transaction was fully aligned with our strategic direction, has allowed us to maximize value for our shareholders and focus on our remaining core assets. Our financial position at quarter end underscores the strength of our business. We closed the period with a very strong consolidated cash balance of $86.3 million, including $78.1 million at the corporate level. This gives us significant flexibility to continue investing in our hospitals and to further return capital to shareholders. We are currently evaluating alternatives to return capital, and we look forward to updating you once any decisions are made. Speaking of our hospitals, during the quarter, Arkansas Surgical Hospital earned the 2025 Human Experience Guardian of Excellence Award for the 6th consecutive year, placing them in the top 5% of hospitals nationwide for exceptional patient experience.

[Jason Redman, President and CEO at Medical Facilities]

The hospital was also voted Best Doctor-Owned Hospital by AY Magazine readers. That recognition will be featured in the Arkansas Focused Lifestyle Publications Best of the Best edition in June. Additionally, last quarter, I mentioned that Sioux Falls Specialty Hospital had received the Blue Distinction Center+ designation for knee and hip replacement by Wellmark Blue Cross and Blue Shield. Since then, they have also received the Blue Distinction Center+ recognition for spine surgery. We're very proud of both hospitals and of our strong start to the year. We remain focused on executing our strategy, driving operational performance, and delivering long-term value. I will now turn the call over to David to review our financial results in more detail. David?

[David Watson, CFO at Medical Facilities]

Thanks, Jason, and good morning, everyone. As Jason mentioned earlier, we had facility service revenue of $67.1 million for the quarter, which was an increase of 10.8% from Q1 of last year. The growth came from the combined impact of case and payer mix, which included more orthopedic and spine procedures. Although total surgical cases were down 0.6% in the quarter, this was due to a decline in low-margin dental procedures. Excluding dental, our surgical cases were up 1.3% in the quarter. Outpatient cases were up 2.6%, but inpatient cases decreased by 2.7% and observation cases were down 8.9%. Pain management cases were down 21.6%, with a decrease again stemming from Arkansas Surgical Hospital, as discussed in prior calls.

[David Watson, CFO at Medical Facilities]

The pain doctor that started at ASH last August continues to ramp up, and both hospitals have active recruiting campaigns to attract additional pain doctors. Our operating expenses were up approximately $4.7 million or 9.3%. More than half of the increase came from consolidated drugs and supplies, which climbed 13.5%, mostly due to case mix and higher surgical volumes outside of dental. Also contributing to the increase were consolidated salaries and benefits, which rose 9.1%, reflecting annual merit increases and elevated market-driven compensation for anesthesia nurse practitioners. Additionally, our G&A expenses rose 5.8%, primarily due to higher costs for contracted anesthesia services, physician guarantees, and repairs and maintenance.

[David Watson, CFO at Medical Facilities]

As Jason mentioned earlier, our profitability improved year-over-year, with income from operations increasing 17.6% to $12.8 million and EBITDA rising 13.8% to $15.7 million. Looking at our balance sheet, at the end of March, we had consolidated net working capital of $67.1 million, with cash and cash equivalents of $86.3 million. This compares to net working capital of $54 million and cash and cash equivalents of $43.4 million at the end of December. The change in consolidated net working capital was driven largely by the sale of Oklahoma Spine Hospital, which removed Oklahoma Spine-related current assets and liabilities and boosted cash and cash equivalents from the sale proceeds. Finally, we remain free of corporate-level bank debt since paying off our corporate credit facility back in 2024.

[David Watson, CFO at Medical Facilities]

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

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. If you have any question, please press star followed by the number 1 on your touch-tone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the number 2. We will pause for just a moment to compile the Q&A roster. Once again, if you wish to ask a question, please press star followed by the number 1 on your telephone keypad. As there are no question at this time, I will now turn the call back over to Jason for the closing remarks.

[Jason Redman, President and CEO at Medical Facilities]

Thank you, operator, and thank you to everyone joining us this morning. We value your ongoing support and look forward to continuing to share updates on our progress. Have a great day.

[Operator]

Ladies and gentlemen, this concludes this conference call. Thank you everyone for joining. You may now disconnect.

Participants

Executives

• David Watson, CFO
• Jason Redman, President and CEO