MDTH Medcath Corp. (MM)

MedCath Corporation Reports First Quarter Earnings CHARLOTTE, N.C., Feb. 3 /PRNewswire-FirstCall/ -- MedCath Corporation (NASDAQ:MDTH), a healthcare provider focused on the diagnosis and treatment of cardiovascular disease, today announced its operating results for its first fiscal quarter, which ended December 31, 2004. First quarter highlights: -- Net revenue increased 19.1% -- Adjusted EBITDA rose 41.4% -- Same facility hospital net revenue increased 9.4% -- Same facility adjusted admissions increased 8.6% First Quarter 2005 Results MedCath's net revenue increased 19.1% to $184.8 million in the first quarter of fiscal 2005 from $155.1 million in the first quarter of fiscal 2004. Income from operations was $15.1 million in the first quarter of fiscal 2005, compared to $7.9 million in the first quarter of fiscal 2004. Adjusted EBITDA increased 41.4% to $25.2 million from $17.8 million and income from continuing operations was $2.6 million, or $0.14 per diluted share, in the first quarter of fiscal 2005, compared to income from continuing operations $765,000, or $0.04 per diluted share, in the first quarter of fiscal 2004. Net income for the quarter, including the results of The Heart Hospital of Milwaukee, which is accounted for as discontinued operations, totaled $4.5 million, or $0.24 per diluted share compared to net loss of $933,000, or $0.05 per share in the first quarter of fiscal 2004. During the first quarter of fiscal 2005, MedCath sold the assets of The Heart Hospital of Milwaukee and closed the facility's operations. For the first fiscal quarter of 2005, MedCath's results include income from discontinued operations, net of taxes, of $1.9 million. Income from discontinued operations includes a gain on sale of the assets, less operating losses, facility closing costs and other related charges. "During the first quarter, we continued to benefit from management initiatives that were established over the past year," said John T. Casey, MedCath's chairman and chief executive officer. "We are now well positioned for long-term growth and are actively pursuing joint venture opportunities that will be beneficial to MedCath." Operating Statistics and Cash Flow Hospital admissions for the first quarter of fiscal 2005 increased 13.6% and adjusted admissions rose 18.2% from the first quarter of the previous fiscal year. Hospital division net revenue increased 22.4%. Same facility admissions increased 3.0%, adjusted admissions increased 8.6%, inpatient catheterization procedures increased 9.6% and inpatient surgical procedures increased 9.0%, which contributed to the increase in same facility hospital division net revenue of 9.4% during the quarter versus the prior year. Cash flow from operations totaled $9.8 million in the first quarter of fiscal 2005 in comparison to $6.3 million in the first quarter of fiscal 2004. Use of Non-GAAP Financial Measures This release contains measures of MedCath's historical financial performance that are not calculated and presented in conformity with generally accepted accounting principles ("GAAP"), including Adjusted EBITDA. Adjusted EBITDA represents MedCath's income from continuing operations before interest expense; interest income; taxes; depreciation; amortization; gain or loss on disposal of property, equipment and other assets; other income, net; equity in net earnings of unconsolidated affiliates; and minority interest. MedCath's management uses Adjusted EBITDA to measure the performance of the company's various operating entities, to compare actual results to historical and budgeted results, and to make capital allocation decisions. Management provides Adjusted EBITDA to investors to assist them in performing their analysis of MedCath's historical operating results. Further, management believes that many investors in MedCath also invest in, or have knowledge of, other healthcare companies that use Adjusted EBITDA as a financial performance measure. Because Adjusted EBITDA is a non-GAAP measure, Adjusted EBITDA, as defined above, may not be comparable to other similarly titled measures of other companies. MedCath has included a supplemental schedule with the financial statements that accompany this press release that reconciles historical Adjusted EBITDA to MedCath's income from continuing operations. Management will discuss and answer questions regarding MedCath's quarterly results today during a 10 a.m. ET conference call. In the United States, you may participate by dialing (877) 697-5351. International callers should dial (706) 634-0602. The conference ID for both domestic and international callers is "MedCath." A live webcast will also be available on the company's web site, http://www.medcath.com/. This information will be available on the web site on or immediately following the conference call for 30 days. A recorded replay of the call will be available until 11:59 p.m. ET, February 10, 2005. To access the replay, domestic callers should dial (800) 642-1687 and international callers should dial (706) 645-9291. The archived conference ID is 3211353. This press release and the financial information included therewith will be accessible on the web, by going to http://www.medcath.com/, "Investor Relations," then clicking on "News." MedCath Corporation, headquartered in Charlotte, N.C., is a healthcare provider focused on the diagnosis and treatment of cardiovascular disease. While each of its majority-owned hospitals is licensed as a general acute care hospital, MedCath focuses on serving the unique needs of patients suffering from cardiovascular disease. Together with its physician partners who own equity interests in them, MedCath currently owns and operates twelve hospitals with a total of 727 licensed beds, located in Arizona, Arkansas, California, Louisiana, New Mexico, Ohio, South Dakota, and Texas. In addition to its hospitals, MedCath provides cardiovascular care services in diagnostic and therapeutic facilities located in various states and through mobile cardiac catheterization laboratories. Parts of this announcement contain forward-looking statements that involve risks and uncertainties. Although management believes that these forward-looking statements are based on reasonable assumptions, these assumptions are inherently subject to significant economic, regulatory and competitive uncertainties and contingencies that are difficult or impossible to predict accurately and are beyond our control. Actual results could differ materially from those projected in these forward-looking statements. We do not assume any obligation to update these statements in a news release or otherwise should material facts or circumstances change in ways that would affect their accuracy. These various risks and uncertainties are described in detail in Exhibit 99.1 to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 14, 2004. A copy of this report, including exhibits, is available on the Internet site of the Commission at http://www.sec.gov/. These risks and uncertainties include, among others, the impact of the Medicare Prescription Drug Improvement Act of 2003 and other healthcare reform initiatives, possible reductions or changes in reimbursements from government or third party payors that would decrease our revenue, greater than anticipated losses at new hospitals during the ramp up period, a negative finding by a regulatory organization with oversight of one of our hospitals, and changes in medical or other technology and reimbursement rates for new technologies. MEDCATH CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended December 31, 2004 2003 Net revenue $184,760 $155,123 Operating expenses: Personnel expense 57,213 47,012 Medical supplies expense 52,486 41,977 Bad debt expense 11,484 13,788 Other operating expenses 38,400 31,520 Pre-opening expenses - 3,016 Depreciation 9,736 9,723 Amortization 290 290 (Gain)/loss on disposal of property, equipment and other assets 3 (84) Total operating expenses 169,612 147,242 Income from operations 15,148 7,881 Other income (expenses): Interest expense (7,998) (6,320) Interest income 390 231 Other income, net 5 4 Equity in net earnings of unconsolidated affiliates 769 577 Total other expenses, net (6,834) (5,508) Income from continuing operations before minority interest, income taxes and discontinued operations 8,314 2,373 Minority interest share of earnings of consolidated subsidiaries (3,999) (1,091) Income from continuing operations before income taxes and discontinued operations 4,315 1,282 Income tax expense 1,723 517 Income from continuing operations 2,592 765 Income (loss) from discontinued operations, net of taxes 1,948 (1,698) Net income (loss) $4,540 $(933) Earnings (loss) per share, basic Continuing operations $0.14 $0.04 Discontinued operations 0.11 (0.09) Earnings (loss) per share, basic $0.25 $(0.05) Earnings (loss) per share, diluted Continuing operations $0.14 $0.04 Discontinued operations 0.10 (0.09) Earnings (loss) per share, diluted $0.24 $(0.05) Weighted average number of shares, basic 18,045 17,949 Dilutive effect of stock options 932 - Weighted average number of shares, diluted 18,977 17,949 MEDCATH CORPORATION SELECTED OPERATING DATA (In thousands, except per share data and selected operating data) (Unaudited) Three Months Ended December 31, 2004 2003 % Change Statement of Operations Data: Net revenue $184,760 $155,123 19.1% Adjusted EBITDA (1) $25,177 $17,810 41.4% Income from operations $15,148 $7,881 92.2% Income from continuing operations $2,592 $765 238.8% Earnings per share from continuing operations, basic $0.14 $0.04 237.0% Earnings per share from continuing operations, diluted $0.14 $0.04 220.5% (1) See Supplemental Financial Disclosure--Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures. Three Months Ended December 31, 2004 2003 % Change Selected Operating Data (consolidated) (a): Number of hospitals 11 10 Licensed beds (b) 672 580 Staffed and available beds (c) 631 524 Admissions (d) 10,891 9,588 13.6% Adjusted admissions (e) 14,293 12,093 18.2% Patient days (f) 37,158 34,088 9.0% Adjusted patient days (g) 48,393 42,944 12.7% Average length of stay (days) (h) 3.41 3.56 (4.2)% Occupancy (i) 64.0% 70.7% Inpatient catheterization procedures 5,808 4,654 24.8% Inpatient surgical procedures 2,775 2,322 19.5% Hospital division revenue $171,229 $139,930 22.4% Three Months Ended December 31, 2004 2003 % Change Selected Operating Data (same facility): Number of hospitals 9 9 Licensed beds (b) 580 580 Staffed and available beds (c) 547 524 Admissions (d) 9,874 9,588 3.0% Adjusted admissions (e) 13,129 12,093 8.6% Patient days (f) 33,344 34,088 (2.2)% Adjusted patient days (g) 44,049 42,944 2.6% Average length of stay (days) (h) 3.38 3.56 (5.1)% Occupancy (i) 66.3% 70.7% Inpatient catheterization procedures 5,100 4,654 9.6% Inpatient surgical procedures 2,531 2,322 9.0% Hospital division revenue $153,069 $139,930 9.4% (a) Selected operating data includes consolidated hospitals in operation as of the end of the period but does not include hospitals which were accounted for using the equity method in our consolidated financial statements. (b) Licensed beds represent the number of beds for which the appropriate state agency licenses a facility regardless of whether the beds are actually available for patient use. (c) Staffed and available beds represent the number of beds that are readily available for patient use at the end of the period. (d) Admissions represent the number of patients admitted for inpatient treatment. (e) Adjusted admissions is a general measure of combined inpatient and outpatient volume. We computed adjusted admissions by dividing gross patient revenue by gross inpatient revenue and then multiplying the quotient by admissions. (f) Patient days represent the total number of days of care provided to inpatients. (g) Adjusted patient days is a general measure of combined inpatient and outpatient days. We computed adjusted patient days by dividing gross patient revenue by gross inpatient revenue and then multiplying the quotient by patient days. (h) Average length of stay (days) represents the average number of days inpatients stay in our hospital. (i) We computed occupancy by dividing patient days by the number of days in the period and then dividing the quotient by the number of staffed and available beds. MEDCATH CORPORATION SUPPLEMENTAL FINANCIAL DISCLOSURE - RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES (Unaudited) The following table reconciles Adjusted EBITDA with MedCath's income from continuing operations as derived directly from MedCath's consolidated financial statements for the three months ended December 31, 2004 and 2003. Three Months Ended December 31, 2004 2003 (in thousands) Income from continuing operations $2,592 $765 Add: Income tax expense 1,723 517 Minority interest share of earnings of consolidated subsidiaries 3,999 1,091 Equity in net earnings of unconsolidated affiliates (769) (577) Other income, net (5) (4) Interest income (390) (231) Interest expense 7,998 6,320 (Gain)/loss on disposal of property, equipment and other assets 3 (84) Amortization 290 290 Depreciation 9,736 9,723 Adjusted EBITDA $25,177 $17,810 DATASOURCE: MedCath Corporation CONTACT: John T. Casey, Chairman/Chief Executive Officer, or James E. Harris, Chief Financial Officer, both of MedCath, +1-704-708-6600 Web site: http://www.medcath.com/

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