Medical Facilities (DR) Q3 2025 earnings summary

Executive summary

• Facility service revenue rose 7.5% year-over-year to $82.6 million, driven by higher surgical case volumes, favorable payor mix, and rate increases, with a notable rebound at Sioux Falls Specialty Hospital.

• Income from operations increased 28.4% to $12.2 million; EBITDA grew 17.7% to $16.1 million, excluding prior year government stimulus.

• Both Sioux Falls and Arkansas hospitals received five-star ratings for nurse communications in September.

• $5.6 million was returned to shareholders through the repurchase of 514,200 shares under the NCIB.

• Surgical case volumes increased 1.1% year-over-year, with outpatient cases up 3.3% and a rebound at Sioux Falls Specialty Hospital.

Financial highlights

• Net income from continuing operations was $12.9 million for Q3 2025, down 7.6% year-over-year; for the nine months, net income rose 51.9% to $31.5 million.

• Basic EPS for Q3 2025 was $0.44, up 91.3% year-over-year; for the nine months, basic EPS was $0.83, up 538.5%.

• Operating expenses before non-cash share-based compensation increased 6.0% to $70.7 million in Q3 2025.

• Distributable cash flow for Q3 2025 was C$4.7 million, with a payout ratio of 35.2%.

• Quarterly cash dividend of C$0.09 per share, annualized yield of 2.55% on September 30, 2025 closing price.

Segment performance

• Pain management volumes were negatively impacted by physician turnover, with new hires expected to improve future performance.

• Drugs and supplies costs rose 10.5% due to higher acuity procedures, partially offset by implant cost savings and vendor rebates.

• G&A expenses decreased 4.9% due to lower share-based compensation and professional fees, offset by higher recruiting and maintenance costs.

• Specialty surgical hospitals in Arkansas, Oklahoma, and South Dakota, and an ambulatory surgery center in California, contributed to revenue growth.

• Consolidated results exclude Black Hills Surgical Hospital, which was treated as discontinued operations in prior periods.