Good morning, everyone. Welcome to Medical Facilities Corporation 2021 fourth quarter earnings call. After management's remarks, this call will include a question-and-answer session whereby qualified equity analysts will be permitted to ask questions. 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 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 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. Rob Horrar, President and CEO of Medical Facilities. Please go ahead.
Thank you, Jennifer. Good morning, and welcome to our fourth quarter earnings call. Joining me today is David Watson, our Chief Financial Officer. Earlier this morning, we released our fourth quarter and year-end results. Our news release, financial statements, and MD&A may be accessed through our website at www.medicalfacilitiescorp.ca and have been filed with SEDAR today. We are pleased to report a solid fourth quarter to close out a much improved year compared to 2020. We're proud of our results given that COVID was still widespread in the fourth quarter. As the Delta variant waned, it was replaced by the more transmissible Omicron variant. Our teams were able to respond to the ever-changing effects of the pandemic. However, COVID did continue to impact staffing and scheduling of cases in the fourth quarter and into 2022.
We do expect pressures on supply and labor costs to continue to be a headwind in the near term. Total surgical volumes were up 1.5% for the quarter and 8.9% for the year over the same periods in 2020. Although we are still not back to pre-pandemic levels, we are certainly encouraged by the resilience of our physician partners, support of our employees and healthcare professionals, as well as the recent downward trend in COVID cases in the United States. Rebounding surgical volumes, higher facility service revenue, and the receipt of additional government stimulus income contributed to increases in operating income of 18.1% and 14.1% for the quarter and the year respectively.
Cash available for distribution also increased for the quarter as a result of the higher income from facilities, with the fourth quarter of 2021 having the highest generated cash since the fourth quarter of 2018. Our solid financial performance in 2021 and our ability to weather the impact of the pandemic overall are testaments to our physician-centric business model and being well aligned with the ongoing market shift favoring high quality, low-cost care settings. Our much improved cash flow performance and our strong financial position. We're confident in our ability to navigate challenges that lie ahead while meeting our capital allocation goals, which include delivering shareholder returns through competitive dividends and share repurchases. Last quarter, we announced a 15% increase in our quarterly dividend, which commenced in the fourth quarter.
At the same time, we announced our intent and subsequently the approval and implementation of a normal course issuer bid. During the fourth quarter, we repurchased 310,000 common shares for a total consideration of $2.1 million from the open market. Today, we announced the TSX accepted our amendment to expand the normal course issuer bid, which will allow us to purchase up to 10% of our issued and outstanding common shares. In 2022, we remain committed to increasing shareholder value by focusing on responsible growth. In terms of organic growth, we are focused on expanding our existing facilities, like the expansion in Arkansas Surgical Hospital in 2021, as well as through the recruitment of new physicians. We additionally invested in robotics, adding 5 new systems company-wide in the past year.
Looking ahead, we will also continue to leverage our existing network to explore opportunities to create de novo ASCs while remaining open to the right acquisition opportunities. With that, I would like to turn the call over to David to review our financial results for the quarter. David?
Thanks, Rob, and good morning, everyone. I will discuss our financial performance for the quarter and provide an update on our balance sheet and liquidity. I would also like to remind everyone that all dollar amounts expressed in today's call are in U.S., dollars, unless stated otherwise. Looking at our top line, facility service revenue for the quarter increased 3.3% to $110.7 million compared to the same period in 2020. As Rob mentioned, our case volumes were up 1.5% from the same quarter last year. Although inpatient cases declined 21%, outpatient cases were up 5%, and observation cases increased by 31%. We recognized a further $5.7 million in government stimulus income during the quarter, resulting in total revenue and other income of $116.4 million.
It was an increase of 6.3% compared to Q4 2020. Consolidated income from operations increased 18.1% to $25.5 million for the quarter. The increase was attributable to the higher facility service revenue and the higher government stimulus income during the period. EBITDA for the quarter was $32 million, or 27.4% of revenue, compared to $28.4 million, or 26% of revenue, in the fourth quarter of 2020.
During the quarter, we generated cash available for distribution totaling CAD 14.7 million, resulting in a payout ratio of 16.9% versus 21.5% in Q4 2020. We finished the year with a strong balance sheet and improved financial flexibility. As of December 31, we had consolidated net working capital of $67.4 million, including $61 million of cash and equivalents. This compares to working capital of $45 million, including cash and equivalents of $66.2 million at the end of 2020. Total cash includes $15.2 million of Medicare advances, which will be recouped by year end. The year-end balance on our corporate line of credit was $26 million. Inclusive of lease liabilities, our net debt to equity stands at 0.44.
Our leverage remains significantly lower than our U.S. trading peers, and we are well-resourced to capitalize on both growth opportunities and the return of capital to shareholders via our dividend and NCIB program. This concludes my financial review for the quarter. For additional detail on our financial results, including specific results for each facility, please refer to our MD&A. With that, we would now like to open the line for questions. Jennifer?
Thank you. If you'd like to ask a question, please signal by pressing * one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, that's * one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll go first to Endri Lico with National Bank.
Hi. Good morning. Thanks for taking my questions. I'll start with the first one. I have a few, but I'll go back in the line as well. I mean, if I ask so many, but the first one is, Rob, you mentioned in your prepared comment that you were exploring de novo opportunities as well as open to the right acquisition ones. I was wondering if you can talk a little bit about them. Anything sort of in the short term or any color that you can give around that.
Sure. You know, we do continue to work a fairly robust pipeline of opportunities and, you know, we're not, of course, interested in distressed or turnaround types of situations. We've had quite a fair amount of looks. Those include de novo and acquisition opportunities and, you know, that's just, again, there's a little bit of noise with the pandemic and trying to get to, you know, real run rates and opportunities. No, we've got a fairly robust opportunity look. It's just finding that right situation. Of course, we've talked about de novos, Endri, take a fairly long time to germinate, so.
Okay. No, thank you for that. Since in the theme of growth, and more a bit of focus on the organic side, you completed the expansion in Arkansas. Congrats for that. When do you think it's fully ramped up in terms of producing and contributing to results?
Well, I mean, the sort of terms of the operating rooms, they're open and available, and they were in the fourth quarter. I think for the most part, we've said, you know, there's no barriers to that. You know, they continue, facilities continue to recruit. We've added robotics, we've got new physicians, new capacity, so it's ready to go and receive volumes for the year.
Okay. Thank you. One more for me, and then I'll jump in the queue. You mentioned that you were still below 2019. Two questions there. The first one, if you can quantify how much below or what percentage of 2019 you are. The second part to that is why do you think it's persistent, even towards the end of the year. How do you think it develops in 2022?
Yeah, I know. You know, we talked about the fact that we had really a twin surge starting with Delta then replaced by Omicron. COVID continues to be the story here. You know, we're mid-single digit around in terms of variance to 2019. The volume's around 6% below that. That's where we think a base run rate is, and it's improved since last year, but you know, we'll still see that, and we expect it to normalize again further this year, barring any other you know, variants and surges on the COVID front.
Okay. Thank you. I'll get back in the queue. Thanks.
Okay. Thanks, Endri.
We'll take our next question from Chelsea Stellick with iA Capital Markets.
Hi. Good morning. Congratulations on the quarter. Just two questions from me. The main one being just looking for additional color on the Black Hills closure. Just any color on that would be great.
Oh, you're talking about the urgent care?
Yep. Sure.
Yeah, in that market, you know, we operate four urgent cares in a wider service area. You know, this particular urgent care, it just, you know, was, you know, it's part of a larger outreach strategy. The urgent care portion, not necessarily the outreach offices, just was underperforming, so decided to close it and focus the volumes on the others.
Material impact or likely not?
No.
Okay.
No.
Okay.
Yeah. Go ahead.
My second question, just in terms of, you know, staffing shortages continuing as you mentioned into the first quarter, what sort of impact will this have, I guess, in terms of magnitude compared to the fourth quarter? You know, obviously the fourth quarter is seasonally stronger than Q1, so any offsets in that?
Yeah, you know, luckily we have a high retention in our staffing, you know, and have had. That's a secret ingredient of our success. You know, there's two parts to that really. You know, the staffing challenge to retain staff in light of the shortages and competition, you know, has been an increase of cost, and it resulted in some retention bonuses and shift differential types of payments, which is a little bit of a headwind. The second has been really more of absenteeism around COVID, which we saw at the very end of the fourth quarter and into the first quarter. You know, we've been lucky to retain that and not have to use extraordinarily expensive contract labor. We do expect that is gonna continue into this year.
You know, we're not alone in that headwind. It's not limited to our geographies. It's fairly a national phenomenon. We're not gonna put a figure to that. We do expect that we'll hopefully normalize it more toward the end of the year.
Perfect. Thank you so much. I'll jump back in the queue.
Once again, to ask a question, that is * one. We'll go back to Endri Lico with National Bank.
Thank you for the follow-up. I'll continue actually with Black Hills. I have a question there. In terms of the medical imaging was down in the quarter, can you elaborate what drove that and whether we can expect a recovery in Q1?
No, I think that there's nothing systemic there. It really just is a matter of again, of some COVID and scheduling types of opportunities. There's nothing systemic that would have impacted the volume, nothing to call out on that. We would expect that to return.
Okay. Thank you. The other question is that there's been some potential competition activity in Arkansas. There's a new hospital coming there in a couple of years or so. Do you have any comments on that? I mean, how does that fit with your plan of growth and the completion of the centers that you put in place in Arkansas?
Yes. You know, you're talking about, it's an existing competitor, UAMS, University of Arkansas for Medical Sciences, and that's an expansion of their hospital campus. Where we understand that to be more focused on trauma and oncology. You know, again, you know, as we call out, we're in competitive markets, and as we invest capital in our facilities, we don't expect the competition to be static. Again, we've got very strong physician partnerships in that market and, you know, we don't, you know, we think we'll be just fine in the competitive profile in Little Rock.
Okay. Thank you. That's it for me.
Once again, that's * one for questions. At this time, there are no further questions. I'll turn the call back to Mr. Rob Horrar for additional or closing comments.
Thank you, Jennifer. In closing, we thank our physician partners, nurses, and all team members who deliver outstanding care to patients each and every day. We look forward to reporting on our progress again throughout 2022. Thank you.
This does conclude today's conference. We thank you for your participation.