CHARLOTTE, N.C., Nov. 17 /PRNewswire-FirstCall/ -- MedCath
Corporation (NASDAQ:MDTH), a healthcare provider focused on the
diagnosis and treatment of cardiovascular disease, today announced
operating results for its fourth fiscal quarter, which ended
September 30, 2005. Fourth quarter highlights: - Net revenue
increased 4.5% to $186.7 million - Adjusted EBITDA of $21.7
million, excluding $1.5 million in non-cash personnel expense
related to the accelerated vesting of certain unvested options -
Adjusted admissions increased 5.3%. Cardiovascular inpatient
admissions increased 3.0% Fourth Quarter 2005 Results MedCath's net
revenue increased 4.5% to $186.7 million in the fourth quarter of
fiscal 2005 from $178.6 million in the fourth quarter of fiscal
2004. Income from operations was $7.2 million in the fourth quarter
of fiscal 2005, compared to income from operations of $5.6 million
in the fourth quarter of fiscal 2004. Adjusted EBITDA decreased
7.0% to $21.7 million from $23.3 million, and loss from continuing
operations was $(2.1) million, or $(0.11) per basic and diluted
share, in the fourth quarter of fiscal 2005, compared to loss from
continuing operations of $(6.2) million, or $(0.34) per basic and
diluted share, in the fourth quarter of fiscal 2004. MedCath's
fourth quarter of fiscal 2005 financial results include the
following unusual items, including the related impact on earnings
per share, after minority interest, where applicable, and income
taxes: - A $1.7 million, or a net impact of $0.05 per share,
increase in operating expense related to several items, including
incremental costs associated with Sarbanes-Oxley implementation,
senior management recruiting and relocation expenses, estimated
expenses incurred at one hospital due to Hurricane Katrina, legal
fees related to a previously disclosed lawsuit filed by MedCath
against an information technology company, and other miscellaneous
items. - A net increase of $0.02 per share, related to a $2.7
million decrease in supply expense due to a reduction of an accrual
at one hospital, offset in part by $1.2 million in additional
depreciation expense at one hospital. - $2.7 million, or $0.08 per
share, in combined impairment expense related to management's
decision to discontinue implementation of certain accounting
software, as well as the determination that the carrying value of a
management contract in the diagnostics division exceeded its fair
value. In comparison, MedCath's fourth quarter of fiscal 2004
financial results were negatively impacted by the following unusual
items, including the related impact on earnings per share, after
minority interest, where applicable, and income taxes: - Loss on
debt refinancing totaling $5.5 million, or a net impact of $0.18
per share, related to a refinancing transaction completed in the
quarter; - Impairment expense of $7.2 million, or $0.25 per share,
related to MedCath's decision to discontinue implementation of a
healthcare information system; - Correction of a construction
deficiency at one hospital that reduced Adjusted EBITDA by $760,000
and earnings per share by $0.02; and - Nonrecurring tax benefits
that favorably impacted earnings per share by $0.03. "We
experienced lower than expected cardiovascular volumes at several
facilities. Our operating results were also hurt by increases in
our bad debt and supply expenses," said John Casey, chairman and
chief executive officer. "I am pleased that we did manage to
increase revenues from a year earlier. "We're focused on improving
results in our most challenging markets," Casey said. "Ed French,
who recently joined us as interim Chief Operating Officer, is
putting in place the necessary near-term strategic initiatives to
address these markets." Operating Statistics Hospital admissions
for the fourth quarter of fiscal 2005 increased 3.9% and adjusted
admissions rose 5.3% from the fourth quarter of the previous fiscal
year. Same facility hospital division net revenue increased 5.5%,
same facility inpatient catheterization procedures increased 5.8%
and inpatient surgical procedures increased 4.5%. 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 or loss from continuing operations
before interest expense; taxes; depreciation; amortization; gain or
loss on disposal of property, equipment and other assets; interest
and other income, net; equity in net earnings of unconsolidated
affiliates; minority interest; and non-cash share based
compensation. 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. Earnings Conference Call and Webcast 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, Nov. 24, 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 9937968. 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., develops, owns and operates
hospitals in partnership with physicians, most of whom are
cardiologists and cardiovascular surgeons. While each of its
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 owns and operates 12
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. MedCath also provides consulting and
management services tailored to cardiologists and cardiovascular
surgeons. 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 proposed
legislation to extend the provisions 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 Twelve Months
Ended September 30, September 30, 2005 2004 2005 2004 Net revenue
$186,670 $178,637 $758,560 $678,605 Operating expenses: Personnel
expense 59,657 55,437 234,935 209,682 Medical supplies expense
52,441 50,715 216,329 189,655 Bad debt expense 15,418 13,218 53,663
46,037 Other operating expenses 38,950 35,955 154,168 141,423
Pre-opening expenses - - - 5,103 Depreciation 10,887 10,033 39,571
41,107 Amortization 290 290 1,160 1,160 Loss (gain) on disposal of
property, equipment and other assets (814) 114 (569) 87 Impairments
of long-lived assets 2,662 7,227 2,662 7,227 Total operating
expenses 179,491 172,989 701,919 641,481 Income from operations
7,179 5,648 56,641 37,124 Other income (expenses): Interest expense
(8,716) (7,839) (32,943) (27,764) Interest and other income, net
1,187 249 3,090 863 Loss on debt refinancing - (5,090) - (5,090)
Equity in net earnings of unconsolidated affiliates 802 916 3,356
3,540 Total other expenses, net (6,727) (11,764) (26,497) (28,451)
Income (loss) from continuing operations before minority interest,
income taxes and discontinued operations 452 (6,116) 30,144 8,673
Minority interest share of earnings of consolidated subsidiaries
(3,611) (3,381) (15,968) (7,259) Income (loss) from continuing
operations before income taxes and discontinued operations (3,159)
(9,497) 14,176 1,414 Income tax expense (benefit) (1,082) (3,313)
6,025 665 Income (loss) from continuing operations (2,077) (6,184)
8,151 749 Income (loss) from discontinued operations, net of taxes
(224) (527) 640 (4,372) Net income (loss) $(2,301) $(6,711) $8,791
$(3,623) Earnings (loss) per share, basic Continuing operations
$(0.11) $(0.34) $0.45 $0.04 Discontinued operations (0.01) (0.03)
0.03 (0.24) Earnings per share, basic $(0.12) $(0.37) $0.48 $(0.20)
Earnings (loss) per share, diluted Continuing operations $(0.11)
$(0.34) $0.42 $0.04 Discontinued operations (0.01) (0.03) 0.03
(0.24) Earnings per share, diluted $(0.12) $(0.37) $0.45 $(0.20)
Weighted average number of shares, basic 18,493 18,014 18,286
17,984 Dilutive effect of stock options - - 1,184 - Weighted
average number of shares, diluted 18,493 18,014 19,470 17,984
MEDCATH CORPORATION SELECTED OPERATING DATA (In thousands, except
per share data and selected operating data) (Unaudited) Three
Months Ended September 30, 2005 2004 % Change Statement of
Operations Data: Net revenue $186,670 $178,637 4.5% Adjusted EBITDA
(1) $21,672 $23,312 (7.0)% Income from operations $7,179 $5,648
27.1% Income (loss) from continuing operations $(2,077) $(6,184)
66.4% Earnings (loss) per share from continuing operations, basic
$(0.11) $(0.34) 67.3% Earnings (loss) per share from continuing
operations, diluted $(0.11) $(0.34) 67.3% (1) See Supplemental
Financial Disclosure--Reconciliation of Non-GAAP Financial Measures
to GAAP Financial Measures. Twelve Months Ended September 30, 2005
2004 % Change Statement of Operations Data: Net revenue $758,560
$678,605 11.8% Adjusted EBITDA (1) $100,933 $86,705 16.4% Income
from operations $56,641 $37,124 52.6% Income (loss) from continuing
operations $8,151 $749 988.3% Earnings (loss) per share from
continuing operations, basic $0.45 $0.04 970.3% Earnings (loss) per
share from continuing operations, diluted $0.42 $0.04 905.2% (1)
See Supplemental Financial Disclosure--Reconciliation of Non-GAAP
Financial Measures to GAAP Financial Measures. Three Months Ended
September 30, 2005 2004 % Change Selected Operating Data
(consolidated) (a): Number of hospitals 11 11 Licensed beds (b) 672
672 Staffed and available beds (c) 638 596 Admissions (d) 11,370
10,940 3.9% Adjusted admissions (e) 14,926 14,178 5.3% Patient days
(f) 37,675 36,645 2.8% Adjusted patient days (g) 49,122 47,158 4.2%
Average length of stay (days) (h) 3.31 3.35 (1.2)% Occupancy (i)
64.2% 66.8% Inpatient catheterization procedures 6,155 5,817 5.8%
Inpatient surgical procedures 2,966 2,838 4.5% Hospital division
revenue $173,313 $164,285 5.5% Twelve Months Ended September 30,
2005 2004 % Change Selected Operating Data (consolidated) (a):
Number of hospitals 11 11 Licensed beds (b) 672 672 Staffed and
available beds (c) 638 596 Admissions (d) 45,304 41,924 8.1%
Adjusted admissions (e) 59,764 53,344 12.0% Patient days (f)
156,568 144,764 8.2% Adjusted patient days (g) 205,360 183,606
11.8% Average length of stay (days) (h) 3.46 3.45 0.3% Occupancy
(i) 67.2% 66.4% Inpatient catheterization procedures 23,882 21,688
10.1% Inpatient surgical procedures 11,996 10,606 13.1% Hospital
division revenue $703,854 $621,806 13.2% Three Months Ended
September 30, 2005 2004 % Change Selected Operating Data (same
facility) (a): Number of hospitals 11 11 Licensed beds (b) 672 672
Staffed and available beds (c) 638 596 Admissions (d) 11,370 10,940
3.9% Adjusted admissions (e) 14,926 14,178 5.3% Patient days (f)
37,675 36,645 2.8% Adjusted patient days (g) 49,122 47,158 4.2%
Average length of stay (days) (h) 3.31 3.35 (1.2)% Occupancy (i)
64.2% 66.8% Inpatient catheterization procedures 6,155 5,817 5.8%
Inpatient surgical procedures 2,966 2,838 4.5% Hospital division
revenue $173,313 $164,285 5.5% Twelve Months Ended September 30,
2005 2004 % Change Selected Operating Data (same facility) (a):
Number of hospitals 9 9 Licensed beds (b) 580 580 Staffed and
available beds (c) 546 531 Admissions (d) 40,395 39,692 1.8%
Adjusted admissions (e) 54,034 50,759 6.5% Patient days (f) 139,222
137,532 1.2% Adjusted patient days (g) 185,147 175,241 5.7% Average
length of stay (days) (h) 3.45 3.46 (0.3)% Occupancy (i) 69.9%
70.8% Inpatient catheterization procedures 20,446 20,032 2.1%
Inpatient surgical procedures 10,811 10,101 7.0% Hospital division
revenue $617,170 $582,312 6.0% (a) Selected operating data includes
consolidated hospitals as of the end of the period reported in
continuing operations but does not include hospitals which are
accounted for using the equity method or as discontinued operations
in our consolidated financial statements. Same facility for the
twelve months ended September 30, 2005 excludes the results of
Texsan Heart Hospital and Heart Hospital of Lafayette. (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 hospitals. (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 (loss) from continuing operations as derived directly from
MedCath's consolidated financial statements for the three and
twelve months ended September 30, 2005 and 2004. Three Months Ended
Twelve Months Ended September 30, September 30, 2005 2004 2005 2004
(in thousands) Income (loss) from continuing operations $(2,077)
$(6,184) $8,151 $749 Add: Income tax expense (benefit) (1,082)
(3,313) 6,025 665 Minority interest share of earnings of
consolidated subsidiaries 3,611 3,381 15,968 7,259 Equity in net
earnings of unconsolidated affiliates (802) (916) (3,356) (3,540)
Interest and other income, net (1,187) (249) (3,090) (863) Interest
expense 8,716 7,839 32,943 27,764 Loss on debt refinancing - 5,090
- 5,090 Impairments of long-lived assets 2,662 7,227 2,662 7,227
Loss (gain) on disposal of property, equipment and other assets
(814) 114 (569) 87 Amortization 290 290 1,160 1,160 Depreciation
10,887 10,033 39,571 41,107 Share-based compensation expense 1,468
- 1,468 - Adjusted EBITDA $21,672 $23,312 $100,933 $86,705
DATASOURCE: MedCath Corporation CONTACT: John T. Casey, Chairman
and Chief Executive Officer, or James E. Harris, Chief Financial
Officer, both of MedCath Corporation, +1-704-708-6600 Web site:
http://www.medcath.com/
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