Donald Schellpfeffer - Chief Executive Officer Michael Salter - Chief Financial Officer

Doug Miehm - RBC Capital Markets

Good morning ladies and gentlemen. Welcome to the Medical Facilities Corporation 2013 First Quarter Results Conference Call. Before turning the call over to management listeners are cautioned that today’s presentation and the responses to questions 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 about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements, please consult the MD&A for this quarter. The Risk Factor 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. Listeners are also reminded that today’s call is being recorded for the benefit of individual shareholders, the media and other interested parties who may want to review the call at a later time. I would now like to turn the meeting over to Dr. Donald Schellpfeffer, Chief Executive Officer of Medical Facilities. Please go ahead Dr. Schellpfeffer. Donald Schellpfeffer - Chief Executive Officer: Thank you, operator and good morning ladies and gentlemen. Thank you for participating in today’s conference call. Joining me today is Michael Salter, Chief Financial Officer of Medical Facilities Corporation or MFC. Prior to the market open today we released our 2013 first quarter financial results. Our news release, financial statements and MD&A and media (set) accessed through our corporate website at www.medicalfacilitiescorporation.ca and was also filed on SEDAR (indiscernible). The first quarter was a first full quarter with Arkansas Surgical Hospital consolidated (indiscernible) result. This inclusion help drive year-over-year revenue growth of 23.7% to $72.9 million, the highest level of quarterly revenues in our history. We are extremely pleased with the results of this acquisition which immediately was approved and provided diversification benefits. However our income from operations declined by 7% due to higher operating expenses resulting from case and payor mix at certain of our centers. This affected our cash available for distribution which declined by 11.8%. (Complying) with a higher level of distribution this resulted in a payout ratio for the quarter of 92.2% compared with 79% for the first quarter I reported last year. As we have stated in the past our year-over-year revenue and income from operations does fluctuate from quarter-to-quarter and center-by-center as a result of just in the case mix, payor mix, physician scheduling and case timings. This first quarter was more effective. We view these fluctuations as normal and expect to be for the nature of our business. Michael will now provide a detailed, more detailed insight into our financial performance for the first quarter. And I will conclude with our views on how the larger economic environment was impacting the healthcare market in Medical Facility business. We will then open up the call to any questions you may have. With that let me turn the call over to Michael to discuss our financial results. Michael? Michael Salter - Chief Financial Officer: Thanks, Don and good morning ladies and gentlemen. Before I begin please note that all dollar amounts discussed in today’s call are U.S. dollars unless noted otherwise. For the first quarter revenues increased $72.9 million up 23.7% from the $58.9 million recorded for the same quarter last year. This increase was primarily driven by a strong contribution from the recently acquired Arkansas Surgical Hospital. Results for our remaining specialty hospitals were mixed this quarter. Two of our hospitals Sioux Falls and Dakota Plains recorded revenue growth due to a combination of increases in pain management procedures, surgical cases and in-patient cases coupled with annual price increases. Revenues of two other specialty hospitals and ambulatory surgery center in California were negatively impacted by a combination of unfavorable case and payor mix, physician absences, and a decline in pain management cases. Consolidated operating margin declined to 37.2% from 28% as operating expenses at all of our centers increased during the quarter primarily due to higher drugs and supplies expenses related to shifts in case mix and the overall increase in complexity of the cases, the use of higher cost implants in certain circumstances and vendor price increases. Also annual wage and salary increases at most centers and at the corporate level staffing cost and increased G&A expenses related to the primary and urgent care clinics, the change of a hospital and physical therapy departments at some of our hospitals through an employment-based model, an increase in the payroll tax cost as part of the federal government tax changes on January 1st and the implementation of electronic health record all contributed to higher operating expenses during the quarter. Additionally the first quarter includes for the first time the operating expenses of Arkansas which were not in the comparable period’s operating expenses. As we noted on our last conference call the incorporation of (actual) results and MFC’s consolidated numbers is expected to lower MFC’s margins as ASH while profitable and very accretive for MFC has historically had lower operating margins than MFC’s other centers. As a result of the higher operating expenses during the quarter consolidated income from our operations decreased by 7% to $20.4 million from $21.9 million for the same period last year. For the first quarter we recorded net income of $0.2 million compared with $12.2 million for the same quarter last year. The decrease was largely attributable to the changes in the value of the exchangeable interest liability and our convertible debentures which increased in value by $11.1 million in aggregate during the quarter as well as the increases in the operating expenses mentioned above. These were all positively offset by a $1.1 million income tax recovery versus the 500k income tax expense for the same period last year. Cash available for distribution or CAFD was CAD$8.7 million a decrease from the CAD$9.8 million generated in the first quarter of last year and with our declared distributions increasing slightly to CAD$8 million up from CAD$7.8 million (indiscernible) due to the increase in dividends made effective last September. The result in payout ratio was 92.2% compared to 79% for the same period a year earlier. As of March 31, 2013 MFC has outstanding foreign exchange forward contract totaling $82.9 million to be converted at a weight average rate of CAD$1.021 per U.S. dollar through May 2015. Based on our analysis of pro forma cash available for distribution using the current level of performance we projected will continue to generate sufficient U.S. dollars to satisfy all of our contracted obligations under the hedging contracts, under the hedge contracts will provide us with sufficient Canadian dollars to satisfy anticipated dividends at our current rate of CAD$1.125 per share. And as usual I will refer you to our management discussion of the analysis on the table on the – detail on the foreign exchange contracts contained therein and our calculations of our pro forma cash. Lastly I would like to give an update on our Normal Course Issuer Bid. During the first quarter we were able to purchase 7600 common shares under the NCIB at an average cost of CAD$14.25 per share. Subsequent to March 31, 2013 we purchased an additional 33600 common shares at an average cost of CAD$14.91. That NCIB has filed yesterday and we announced on Monday afternoon a new NCIB effective from today until May 14, 2014 that will allow us to purchase up to 2% of the 31.4 million shares outstanding as of May 1, 2013. We continue to believe that our purchase plans provide us for the opportunity to acquire common shares from time-to-time at attractive price levels and through the combination of cash retention and the proceeds from debenture offering the company has now build it’s cash, cash equivalent and short term bank deposits of 47.9 million as of March 31, 2013 thereby positioning us also for future growth. Before I turn the call back over to Don I would briefly like to talk about our 7.5% convertible debentures that matured on April 30, 2013. The majority of these debentures were converted into common shares resulting in an increase of 3.1 million shares now leaving that the company’s share capital and public float up by above 11% over the previous numbers. Let me now call on Don for his closing comments. Don. Donald Schellpfeffer - Chief Executive Officer: Thanks, Mike. The outlook for MFC is affected by many inter-related factors including the economy, the healthcare reform and management strategies. While the U.S. economy has demonstrated signs of improvement and recovery in 2012, including reduced rates of unemployment, growth in housing construction starts and improved consumer confidence, it is difficult to predict the course of development with any degree of accuracy or to predict the impact, if any, that tax increases including those implemented January 1, 2013 and other (indiscernible) related to the Patient Protection and Affordability Care Act when combined with spending cuts resulting from the efforts of the U.S. government to improve the fiscal situation will have on the healthcare industry in general or on the company’s business. We believe that the company will continue to benefit from the fact that over 95% percent of the revenues are generated in South Dakota, Oklahoma and Arkansas, states that continue to have unemployment and residential foreclosures below the national average. We continue to believe that as the economy recovers and unemployment rate decline further non-Medicare and non-Medicaid patient volumes, which declined during the recession, will grow and have a positive impact on the results of the company’s operations. With regard to healthcare reform, we believe that due to various factors, including legislative development such as the continued implementation of the Patient Protection and Affordability Care Act, demographic pressures and continuously growing healthcare costs, all sectors of the healthcare industry will increase continuous pressure on reimbursement levels from both government funded plans and private insurance companies in particular all providers will be focused on the reimbursement contract they were ultimately be offered by the insurers providing coverage and they are yet to be formed insurance exchanges. However the demand for healthcare services, including those provided by our facilities, can be expected to increase. The increasing average age and life expectancy of the U.S. population, overall population growth, advances in science and technology and increasing proportion of the population with access to health insurance as a result of the Patient Protection and Affordability Care Act will combine to drive demand for the services provided at our centers. To manage these expectations, we intend to continue our ongoing search for suitable accretive acquisition opportunities. We will also remain focused on driving operating performance across our sectors over the long-term to minimize the impact of external factors. We believe our performance going forward will be driven by increased utilization of expanded facilities at our hospitals, which are contributing to increased case loads and a more favorable case mix. Related to this, we will support the physician recruitment efforts of our centers, as we believe that the increase in the number of physicians holding, medical staff privileges and our ownership interests in our centers will positively impact the result. We continue to pursue other revenue increasing initiatives such as the primary care and urgent care operations in two of our hospitals that are still in the start-up phase and started to show positive contribution, the ability of expanding the opportunities for Medical Facilities hospital to offer their communities an integrated continuum of share. Medical Facilities since its inception, IPO on March of 2004 has had 110 months of consecutive dividend distribution. We are confident in the company’s operation being able to continue to boost the cash available for continuing distribution that was more than adequate to satisfy our current annual dividend of CAD$1.25. We would now like to open the line up for any questions that you may have.

(Operator Instructions) And your first question comes from Doug Miehm with RBC Capital Markets. Your line is now open. Doug Miehm - RBC Capital Markets: Thank you. Don maybe Michael I know that there is always quarter-to-quarter variability between on the sites based on case mix et cetera, et cetera and doctor absences. But when I do look at the Oklahoma operations, there were no physician absences based on what read, I know there was some changes in mix but it look like this quarter was the weakest we have seen since about Q1 of 2011. Could you comment on that and perhaps whether or not things are going to stabilize or maybe rebound there or is it just the reason for the weakness this quarter. I’ll leave it at there. Thanks.

There is a couple of things Doug. Good morning and thanks for joining us.

Good morning, Doug.

The- couple of things have happened. Oklahoma Spine going way back it always had a couple of their areas of business to payors that were out of network and not by desire in particular Blue Cross, Blue Shield. Oklahoma had historically would not contract with physician-owned hospital not just Oklahoma Spine but physician-owned hospitals in general in that state. And actually the reimbursement rates have been up in these hospitals under the other network basis and I think, you are, all of the analysts and fellow quite familiar with the other network saying that phenomenal as supposed to any network. Blue Cross finally abandoned that stance, the stance, which we normally believe was probably aided and abandoned by some of our competitors in those marketplaces in terms of the big hospital system. And Oklahoma Spine similar to other physician-owned hospitals in the states we are able to enter into negotiated contracts with them. And what we are finding and I think it will take a bit of time, there is two things that happened on that typically your average rates may take a little bit of hit from where they have been under the other network arrangement and but you gain access to a much broader base of that particular payor patients. And we really yet believe that we have not really got our lines on exactly what is convened on the numbers. There has been a bit of when you look at some specifically to that payor a little bit of hit from that. In terms of other items in this first quarter, the number of surgical cases was virtually flat at Oklahoma Spine, but there was a shift in the types of cases that we are going to launch that generated a bit lower revenue again we believe that’s just a normal ebb and flow of the types of cases in Q3. We did take a bit of a drop on the pain management and again if you look back over Oklahoma Spine the comments that have been made about it over the years you will find that there has been ups and downs in their pain management revenue. Unfortunately for our bottom line, pain management has a very high margin to it. Again I think that’s been fairly well understood by the analyst community. And the other item is Oklahoma Spine is by virtue of its (greater) name does a lot of work that falls under workers compensation and I’ll let Don to talk a little bit on what’s been going on there. If you look back historically on workers comp about three, I believe it was three years ago, three to three and half years ago, when we did see better numbers in Oklahoma the commissioner of the day had an increased rates significantly for providers of workers comp services such as ourselves and that has been the subject (indiscernible) State House in Oklahoma. Don maybe give a bit more background.

Yeah Doug it’s an android thing for the- at the state level the large business of Oklahoma continuing trying to beat all the reimbursement for workman’s comp but currently according to the management at Oklahoma is that they are supposedly going forward for the next year continue the reimbursement and had been in the past that being said obviously we don’t guarantee to that. As far as the pain is concerned as Mike touched upon there is a new fulltime pain doctor coming from Florida at Oklahoma starting in I think June or .July 1 of this year so that (indiscernible) those numbers moving forward.

And Doug just to finish up on this one, when you look at the center by center margins, we do look at them we looked at averages and medians and rolling averages. Also just to make sure you are well aware you obviously have looked at the numbers in detail. We provided ever since this acquisition in 2005 it’s on a range from 19.1% to37.3% with an average somewhere around 28 million and if we are around 20 million - just under 28. And if you look at the last few months and it’s little bit lower than that median in net average but in and you’re expecting that when you say it’s the lowest that we had seen there but again I still believe and management firmly believes at this point that it is part of these excellent flows as I call them that you see in those margins. Doug Miehm - RBC Capital Markets: Okay. Thank you for that. Second question just is on the urgent care business. Can you give us a few benchmarks in terms of how that’s been improving since it was instituted I know that there is some positive comments but maybe a little bit more detail?

In terms of – we don’t segregate that business so I'm not really ready to start talking about numbers that we’re seeing in flow throws I think it’s our – I think that our system be enhanced in (indiscernible) what they’re providing and they’re continuing with care of the community and I will continue to say that it both evolves and it will aqueous we are seeing encouraging signs in the patients who are not only visiting the urgent care and the primary care facilities but that will also ending up in our facilities for others at services such as imaging and even surgical cases. Doug Miehm - RBC Capital Markets: Okay, great. I’ll just leave it with maybe Don you mentioned acquisitions as an area of focus as it always has been when you say that the same opportunity kind of this year as you did last year. I’ll leave with that. Thank you.

I would say there is always opportunity to go throw if you haven’t made to do a feasibility study and evaluating to see if they’re going to be good fit for Medical Facilities Corporation.

I think that – let me add to that. There are some 250 to 300 depending these numbers believe specialty surgical hospitals all of which have some form of acquisition and it is getting on of course everyone is aware that going forward there won’t be any new ones built with physician ownership is the last stand I believe it’s not that they want to take Medicare and Medicaid. It’s a fairly small community and we do – we really our fingers we believe on that and what can you say there will be periodic I'm sure as we told them are. Doug Miehm - RBC Capital Markets: Thank you.

(Operator Instructions) At this time there are no further questions in queue. I’ll turn the call back over to the presenters. Donald Schellpfeffer - Chief Executive Officer: Thank you for participating on today’s call and for your continued interest in Medical Facilities Corporation. We look forward to reporting with you on our progress on the next quarter. Thank you and have a great day.

Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.