Analyst says Medical Facilities Corporation (TSX:DR) has a favourable prognosis as the company’s margins improve
Capital Ideas Media | January 13, 2021 | SmallCapPower: Rising COVID-19 cases have, unfortunately, postponed many elective surgeries, but these procedures will need to be performed eventually.
Medical Facilities Corporation (TSX:DR) owns four specialty surgical hospitals and seven ambulatory surgery centers in 10 U.S. states, covering specialties such as Orthopaedics, Neurosurgery, Ophthalmology, Pain Management, Gastroenterology/Urology, Obstetrics/Gynaecology, and General Surgery.
(Originally published on Capital Ideas Media on November 17, 2020)
Medical procedures are big business in the United States, conducted in many cases by for-profit corporations and, unlike Canada, are paid for in large part by insurance companies and by the patients themselves.
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During its most-recently reported quarter (Q3 2020), Medical Facilities Corp generated US$98.8 million in revenue along with US$17.6 million in income from operations. The company added that case volumes continued to rebound during the period and in September; it opened a new surgical centre at St. Luke’s Hospital in Chesterfield, Missouri.
DR stock also pays a dividend, and with a current yield of 4.3% shareholders are getting paid to be patient should its stock price take a hit in a market downturn.
National Bank Financial analyst Endri Leno upgraded Medical Facilities stock recently to “Outperform,” following what he called better-than-expected Q3 financial results as well as an improved outlook.
“While we have been on the sidelines with DR for some time due to underperforming acquisitions and margin declines, the former have been largely divested and the latter was up 130 basis points vs. Q2/10 and up 80 basis points vs. 2019,” Mr. Leno said.
The National Bank Financial analyst added that volumes at Medical Facilities Corp continue to normalize and he believes the company’s dividend yield is sustainable at a 25% 2021 estimated payout.
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