CHARLOTTE, N.C., May 10 /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 second fiscal quarter, which ended
March 31, 2007. Second quarter highlights: - Net revenue increased
5.0% to $192.5 million - Adjusted EBITDA rose 15.5% to $29.8
million - Adjusted admissions increased 3.0% Second Quarter 2007
Results MedCath's net revenue increased 5.0% to $192.5 million in
the second quarter of fiscal 2007 from $183.3 million in the second
quarter of fiscal 2006. Income from operations was $18.0 million in
the second quarter of fiscal 2007, compared to income from
operations of $6.8 million in the second quarter of fiscal 2006.
Adjusted EBITDA in the second quarter of fiscal 2007 increased
15.5% to $29.8 million from $25.8 million in the second quarter of
fiscal 2006. Income from continuing operations was $5.8 million, or
$0.27 per diluted share, in the second quarter of fiscal 2007,
compared to a loss from continuing operations of $2.4 million, or
$0.13 per diluted share, in the second quarter of fiscal 2006.
MedCath's second quarter of fiscal 2007 financial results contain
the following unusual items. Per share amounts reflect minority
interest expense, where applicable, and income taxes: - A $2.3
million, or a net impact of $0.04 per diluted share, increase in
net revenue and Adjusted EBITDA due to the settlement of Medicare
and Medicaid cost reports related to prior periods. - A $3.1
million, or a net impact of $0.10 per diluted share, reduction in
net revenue and Adjusted EBITDA due to the increase in a reserve
previously established for repayment of a portion of Medicare
reimbursement related to hospital inpatient services provided to
patients enrolled in a clinical trial conducted at one of our
hospitals between 1998 and 2002 that is under investigation by the
U.S. Department of Justice, and - A $660,000, or a net impact of
$0.02 per diluted share, loss on early extinguishment of debt
related to the prepayment of $39.9 million in term debt and the
prepayment of $11.1 million of equipment debt. In comparison,
MedCath's second quarter of fiscal 2006 financial results were
impacted by certain unusual items that collectively had a $745,000
unfavorable impact to net revenue and Adjusted EBITDA and a
$775,000, or $0.04 per diluted share, unfavorable impact to income
from continuing operations. Share-based compensation expense
totaled $2.1 million or $0.05 per diluted share in the second
quarter of fiscal 2007, compared to $10.2 million or $0.33 per
diluted share in the second quarter of fiscal 2006. Adjusted EBITDA
disclosed above does not include this expense but the expense is
included as a component of income from continuing operations. "Our
strong second quarter results reflect various strategic initiatives
that are intended to improve our operating efficiency while
maintaining our commitment to providing quality health care," said
Ed French, MedCath's president and chief executive officer. "We
believe contributions from these efforts will continue to benefit
not only our existing hospitals as currently configured, but also
those hospitals that we intend to expand." Operating Statistics and
Cash Flow Hospital adjusted admissions for the second quarter of
fiscal 2007 increased 3.0% from the second quarter of the previous
fiscal year. Same facility hospital net revenue increased 5.9%,
excluding the unusual items reported above. Net cash provided by
operating activities of continuing operations for the second
quarter of fiscal 2007 was $15.7 million, up from $12.3 million for
the second quarter of fiscal 2006. Capital expenditures totaled
$6.9 million in the second quarter of fiscal 2007 in comparison to
$8.4 million in the second quarter of fiscal 2006. 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 (loss) from continuing operations
before interest expense; interest and other income, net; income tax
expense (benefit); depreciation; amortization; share-based
compensation expense; gain (loss) on disposal of property,
equipment and other assets; loss on early extinguishment of debt;
equity in net earnings of unconsolidated affiliates; and minority
interest share of earnings of consolidated subsidiaries. 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 (loss) 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 web cast
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, May 17, 2007. To access the replay, domestic callers
should dial (800) 642-1687 and international callers should dial
(706) 645-9291. The archived conference ID is 629347. 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
primarily on the diagnosis and treatment of cardiovascular disease.
MedCath focuses on serving the unique needs of patients suffering
from cardiovascular disease. MedCath owns interests in and operates
eleven hospitals with a total of 667 licensed beds, located in
Arizona, Arkansas, California, Louisiana, New Mexico, Ohio, South
Dakota, and Texas. In addition, MedCath manages the cardiovascular
program at various hospitals operated by other parties. Further,
MedCath provides cardiovascular care services in diagnostic and
therapeutic facilities located in various states. 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 "Risk Factors" in
MedCath's Registration Statement on Form S-3/A filed with the
Securities and Exchange Commission on March 29, 2007. A copy of
this registration statement, including exhibits, is available on
the internet site of the Securities and Exchange Commission at
http://www.sec.gov/. MEDCATH CORPORATION CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share data) (Unaudited) Three
Months Ended Six Months Ended March 31, March 31, 2007 2006 2007
2006 Net revenue $192,491 $183,270 $368,040 $346,883 Operating
expenses: Personnel expense 61,356 65,023 118,531 117,516 Medical
supplies expense 50,649 51,671 98,819 97,865 Bad debt expense
15,445 15,555 29,276 28,610 Other operating expenses 37,323 35,385
73,788 71,173 Depreciation 8,772 8,647 17,641 17,205 Amortization
127 252 379 504 Loss (gain) on disposal of property, equipment and
other assets 802 (38) 859 59 Total operating expenses 174,474
176,495 339,293 332,932 Income from operations 18,017 6,775 28,747
13,951 Other income (expenses): Interest expense (5,768) (8,384)
(13,226) (16,305) Loss on early extinguishment of debt (662) (364)
(5,142) (1,370) Interest and other income, net 1,808 1,336 4,533
2,733 Equity in net earnings of unconsolidated affiliates 1,482
1,410 2,920 2,475 Total other expenses, net (3,140) (6,002)
(10,915) (12,467) Income from continuing operations before minority
interest, income taxes and discontinued operations 14,877 773
17,832 1,484 Minority interest share of earnings of consolidated
subsidiaries (3,960) (4,790) (6,440) (7,608) Income (loss) from
continuing operations before income taxes and discontinued
operations 10,917 (4,017) 11,392 (6,124) Income tax expense
(benefit) 5,106 (1,609) 5,327 (2,451) Income (loss) from continuing
operations 5,811 (2,408) 6,065 (3,673) Income (loss) from
discontinued operations, net of taxes 439 468 (4,711) 400 Net
income (loss) $6,250 $(1,940) $1,354 $(3,273) Earnings (loss) per
share, basic Continuing operations $0.28 $(0.13) $0.30 $(0.20)
Discontinued operations $0.02 0.03 $(0.23) 0.02 Earnings (loss) per
share, basic $0.30 $(0.10) $0.07 $(0.18) Earnings (loss) per share,
diluted Continuing operations $0.27 $(0.13) $0.29 $(0.20)
Discontinued operations $0.02 0.03 $(0.23) 0.02 Earnings (loss) per
share, diluted $0.29 $(0.10) $0.06 $(0.18) Weighted average number
of shares, basic 21,019 18,618 20,568 18,559 Dilutive effect of
stock options and restricted stock 625 - 634 - Weighted average
number of shares, diluted 21,644 18,618 21,202 18,559 MEDCATH
CORPORATION SELECTED OPERATING DATA (In thousands, except per share
data and selected operating data) (Unaudited) Three Months Ended
March 31, Six Months Ended March 31, 2007 2006 % Change 2007 2006 %
Change Statement of Operations Data: Net revenue $192,491 $183,270
5.0% $368,040 $346,883 6.1% Adjusted EBITDA (1) $29,841 $25,842
15.5% $50,775 $42,342 19.9% Income from operations $18,017 $6,775
165.9% $28,747 $13,951 106.1% Income (loss) from continuing
operations $5,811 $(2,408) 341.3% $6,065 $(3,673) 265.1% Earnings
(loss) per share from continuing operations, basic $0.28 $(0.13)
315.4% $0.30 $(0.20) 250.0% Earnings (loss) per share from
continuing operations, diluted $0.27 $(0.13) 307.7% $0.29 $(0.20)
245.0% (1) See Supplemental Financial Disclosure--Reconciliation of
GAAP Financial Measures to Non-GAAP Financial Measures. Three
Months Ended Six Months Ended March 31, March 31, % % 2007 2006
Change 2007 2006 Change Selected Operating Data (a): Number of
hospitals 9 9 9 9 Licensed beds (b) 580 580 580 580 Staffed and
available beds (c) 559 568 559 568 Admissions (d) 10,674 10,904
(2.1)% 20,404 20,809 (1.9)% Adjusted admissions (e) 14,508 14,081
3.0% 27,844 26,977 3.2% Patient days (f) 36,961 36,874 0.2% 71,050
70,156 1.3% Adjusted patient days (g) 50,011 47,748 4.7% 96,505
90,941 6.1% Average length of stay (days) (h) 3.46 3.38 2.4% 3.48
3.37 3.3% Occupancy (i) 73.5% 72.1% 69.8% 67.9% Inpatient
catheterization procedures (j) 5,354 5,653 (5.3)% 10,212 10,588
(3.6)% Inpatient surgical procedures (k) 2,727 2,824 (3.4)% 5,265
5,334 (1.3)% Hospital net revenue $177,944 $168,055 5.9% $339,002
$317,469 6.8% (a) Selected operating data includes consolidated
hospitals in operation 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. (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 volume. 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. (j) Inpatient catheterization procedures represent
the number of inpatients with a procedure performed in one of the
hospitals' catheterization labs during the period. (k) Inpatient
surgical procedures represent the number of surgical procedures
performed on inpatients during the period. MEDCATH CORPORATION
SUPPLEMENTAL FINANCIAL DISCLOSURE - RECONCILIATION OF GAAP
FINANCIAL MEASURES TO NON-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 six
months ended March 31, 2007 and 2006. Three Months Ended Six Months
Ended March 31, March 31, 2007 2006 2007 2006 (in thousands) Income
(loss) from continuing operations $5,811 $(2,408) $6,065 $(3,673)
Add: Income tax expense (benefit) 5,106 (1,609) 5,327 (2,451)
Minority interest share of earnings of consolidated subsidiaries
3,960 4,790 6,440 7,608 Equity in net earnings of unconsolidated
affiliates (1,482) (1,410) (2,920) (2,475) Interest and other
income, net (1,808) (1,336) (4,533) (2,733) Interest expense 5,768
8,384 13,226 16,305 Loss on early extinguishment of debt 662 364
5,142 1,370 Loss (gain) on disposal of property, equipment and
other assets 802 (38) 859 59 Amortization 127 252 379 504
Depreciation 8,772 8,647 17,641 17,205 Share-based compensation
expense 2,123 10,206 3,149 10,623 Adjusted EBITDA $29,841 $25,842
$50,775 $42,342 DATASOURCE: MedCath Corporation CONTACT: O. Edwin
French, President/Chief Executive Officer, or James E. Harris,
Chief Financial Officer, both for MedCath Corporation,
+1-704-708-6600 Web site: http://www.medcath.com/
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