Medical Facilities Corp. ($DR.TO) Initial Screen
High-quality, specialty surgery hospital operator trading at 7.5x FCF with significant upside optionality
Before starting, I would like to thank everyone who has done existing work on MFC. Your research has been invaluable to me and has helped me understand the business to a greater extent.
I would consult whoever is reading this to go and read the original write-ups first. They are as follows:
https://ausram.substack.com/p/medical-facilities-corp
https://www.greystonevalue.com/_files/ugd/47fd79_ffc6d148e7b74658b2eb702a7e2d5047.pdf
https://drive.google.com/file/d/1ayHB7SqEpJ7Dwqhws1JpoBU3QNp-52Ra/view
https://tridentopportunities.com/en/medical-facilities-corp-share-non-cyclical-share-at/
I also want to preface that this is the first time I am looking at a healthcare asset like MFC, so this write-up is perhaps longer than it needs to be.
I hope to be coming out with a second update sometime in February once I have had time to visit both their hospitals in South Dakota and another one in Oklahoma. I also hope that I will get a chance to speak to management before the next update.
Update (3/11/2024):
Here is an updated version of the write-up that fixes the error I made in the cash flows to minority shareholders.
Very good analysis. The weak point of the thesis for me is the huge size of minorities. Unless one gets lunatically specific, it is very difficult to determine how much of the pie is eaten by minorities every year. Anyway, thank you for the excellent work.