Medical Facilities Corp
TSX:DR
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Good morning, everyone. Welcome to Medical Facilities Corporation's 2024 Third Quarter Earnings Call. [Operator Instructions]
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&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. Jason Redman, President and CEO of Medical Facilities. Please go ahead, Mr. Redman.
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 third quarter results. Our news release, financial statements and MD&A are available on our website and have been filed on SEDAR+.
Please note that the income statement variances discussed by David and I this morning will exclude the results from our divested MFC Nueterra ASCs and noncontrollable noncash corporate level charges related to share-based compensation plans.
We had a solid third quarter characterized by an increased number of surgical cases, a 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 postpayment loan reviews and confirmed full forgiveness in all outstanding PPP loans. As a result, we recognized government stimulus income of $11.4 million during the quarter. The corresponding liability on our government stimulus funds repayable was also reversed in the balance sheet.
Thanks largely to the recognition of the government stimulus income, total revenue and other income for the quarter increased by $11.6 million or 11.2% to $115 million. Facility service revenue was essentially flat at approximately $103.6 million in the quarter. Importantly, even when excluding the government stimulus income, our income from operations increased 11.7% to $14.2 million, and EBITDA was up 8.3% to $19.1 million.
On the NCIB front, we repurchased 554,900 shares in the quarter and 1,230,600 shares over the first 9 months of the year, thereby returning $5.7 million and $11.3 million to the shareholders in those respective periods.
Additionally, we continue to reduce our corporate debt, lowering the balance on our credit facility by a further $2 million for the quarter, making it a $12 million decrease over the first 9 months and resulted in an outstanding balance of only $4 million at quarter end.
Before turning things over to David, I wanted to give a big shout-out to the team at Arkansas Surgical Hospital. 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 Readmissions 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. David?
Thank you, Jason, and good morning, everyone. As usual, please note that all dollar amounts that follow are in U.S. dollars.
Third quarter facility service revenue increased $215,000 to $103.6 million as higher surgical and pain management case volumes were partly offset by the combined impact of case and payer mix. Total surgical cases rose by 3.1%, 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% to $90 million, with reductions in drugs and supplies largely offset by increases in salaries and benefits and G&A expenses.
Consolidated salaries and benefits rose by 4.5% as a result of higher clinical and nonclinical 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 Hospital's Gillette Urgent Care center back in April.
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&A expenses were essentially flat year-over-year.
And as Jason mentioned earlier, income from operations was up 11.7% to $14.2 million in the quarter, and EBITDA increased by 8.3% to $19.1 million.
Looking at our balance sheet. At the end of the quarter, we had consolidated net working capital of $11.4 million and cash and cash equivalents of $18.7 million compared to net working capital of $19.8 million and cash and cash equivalents of $24.1 million 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 first 9 months of the year, we paid $4.5 million in dividends, reduced our corporate credit facilities outstanding balance by $12 million and returned $11.3 million to shareholders by repurchasing a little over 1.2 million common shares under the NCIB.
This concludes our prepared remarks. We'd now like to open up the call for questions. Operator?
[Operator Instructions] We do not have any questions at this time. Presenters, please continue.
Thank you, operator, and thank you all for joining us this morning. We look forward to sharing more updates with you next quarter.
This concludes today's conference call. Thank you for your participation. You may now disconnect.