MDTH Medcath Corp. (MM)

CHARLOTTE, N.C., March 23 /PRNewswire-FirstCall/ -- MedCath Corporation (NASDAQ:MDTH) today announced the formation of a business alliance with the Methodist Medical Center of Illinois, a 353-bed hospital system in Peoria, Illinois. Under the terms of the alliance, MedCath will begin managing Methodist's existing cardiovascular program. In addition, MedCath and Methodist will work together to identify, develop and implement specific strategies to expand and enhance Methodist's cardiovascular services. These strategies may include various joint venture and clinical initiatives. The parties also intend to explore the development of a heart tower that will be a dedicated heart facility located on Methodist's existing campus. MedCath will also be engaged to manage the new heart tower on a long-tem basis once it is constructed. "Through this alliance with MedCath, we will continue to build our facilities and technologies dedicated to the treatment of cardiovascular disease," said Michael Bryant, Methodist President and Chief Executive Officer. "MedCath has demonstrated the ability to provide superior clinical results at leading heart hospitals throughout the country. Our partnership will strengthen Methodist's already strong ability to provide outstanding heart care, as evidenced by our being named a Top 100 Heart Hospital by Solucient." "We are pleased to be entering this long-term partnership with Methodist," said Ed French, MedCath's President and Chief Executive Officer. "This is an exemplary example of how our model of joint venturing with not-for-profit hospitals benefits communities through expanded, state-of-the-art cardiovascular services." During the first phase of the alliance, MedCath, as manager of Methodist's cardiovascular program, will receive a management fee that, net of certain operating expenses and taxes, is expected to be approximately $0.02 per share accretive to MedCath's earnings per share on an annual basis. As MedCath and Methodist execute strategies designed to expand and improve Methodist's cardiovascular services, MedCath will have the opportunity to make capital investments, the amount of which will become definable as the scope of the projects and amount of the potential investments are determined. The law firm of McDermott, Will & Emery represented Methodist in this transaction. MedCath Corporation, headquartered in Charlotte, N.C., is a healthcare provider focused on the diagnosis and treatment of cardiovascular disease. MedCath focuses on serving the unique needs of patients suffering from cardiovascular disease. MedCath currently owns interests in 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, 2005. 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 legislation proposed to extend 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, 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. DATASOURCE: MedCath Corporation CONTACT: Ed French, President & Chief Executive Officer, or Tom Hearn, Chief Development Officer, both of MedCath, +1-704-708-6600 Web site: http://www.medcath.com/

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