MedCath Provides Preliminary Second Quarter Fiscal 2008 Earnings and Updates Fiscal 2008 Outlook
April 21 2008 - 8:30AM
PR Newswire (US)
CHARLOTTE, N.C., April 21 /PRNewswire-FirstCall/ -- MedCath
Corporation (NASDAQ:MDTH) announced today preliminary summary
results for its second quarter of fiscal 2008, which ended March
31, 2008. In addition, MedCath announced a revised fiscal 2008
outlook. MedCath's preliminary earnings for the second quarter of
fiscal 2008 and its revised outlook for fiscal 2008 account for
Dayton Heart Hospital as an asset held for sale. MedCath announced
on March 24, 2008 that it had entered into a definitive agreement
to sell Dayton Heart Hospital. MedCath anticipates that its net
revenue for the second quarter of fiscal 2008 will be $156.7 to
$157.3 million, its Adjusted EBITDA $23.4 to $24.0 million and its
earnings from continuing operations $5.0 to $5.6 million or $0.25
to $0.28 per diluted share. During the quarter, MedCath incurred
prior period cost report settlements which reduced preliminary net
revenue and Adjusted EBITDA by $0.2 million and income from
continuing operations by $0.1 million. Also during the second
fiscal quarter, MedCath incurred $0.2 million, or $0.01 per diluted
share, in share-based compensation expense and $0.3 million, or
$0.02 per diluted share, in pre-opening expense related to its
development project in Kingman, Arizona. Share-based compensation
expense and pre-opening expense are excluded from preliminary
Adjusted EBITDA but are included in preliminary income from
continuing operations for the second quarter of fiscal 2008. "The
operating environment in our fiscal second quarter reflects a shift
in product and payer mix that causes us to moderately recast our
expectations," said O. Edwin French, MedCath's President and Chief
Executive Officer. "Despite this, we are reinforced in our strategy
and pleased with our progress in rationalizing assets with a focus
on expanding and diversifying our services. The changes we
experienced this quarter in our cardiovascular services support our
diversification strategy. In this regard, we have announced
projects that will add 34% capacity growth, the preponderance of
which is dedicated to diversification of our revenue base;
something two years ago was aspired to evolve. In addition, we
believe we have organic growth that remains through both cost
containment and revenue opportunities in both our Hospital Division
and MedCath Partners." MedCath's preliminary second quarter
financial results indicate: -- Lower than anticipated inpatient
volumes. For the quarter, same- facility admissions were down 0.9%
in comparison to the second quarter of fiscal 2007. -- Lower than
anticipated revenue per adjusted admission. For the quarter,
same-facility revenue per adjusted admission decreased 0.4% when
compared to the second quarter of fiscal 2007, which was below the
Company's expectation. The decline was primarily due to an increase
in charity care provided to patients receiving non-elective
procedures; an increase in the proportion of net revenue that was
derived from outpatient services, which typically are lower
reimbursing procedures; and a decrease in the Company's case mix
index (CMI) during the quarter, which measures the complexity of
inpatient procedures performed. The reduction in CMI was primarily
due to a 3.2% reduction in inpatient drug eluting stent procedures,
a 6.6% decline in inpatient bare metal stent procedures and a 2.9%
decline in open heart procedures. -- Lower than expected net
revenue and Adjusted EBITDA within the MedCath Partners Division
due to continued weaknesses in certain of the division's majority
owned catheterization laboratories and its mobile leasing unit.
Revised 2008 Outlook As part of the announcement today, MedCath is
providing the following Revised Outlook for its fiscal 2008, which
ends September 30, 2008. Revised 2008 Outlook ($ and shares in
millions) Net Revenue $620.0 to $630.0 Adjusted EBITDA $98.0 to
$101.0 Income from continuing operations $25.8 to $27.4 Maintenance
Capital Expenditures $33.0 to $37.0 Diluted Share Count 19.9 to
20.1 Consistent with the Company's past practice, the Revised 2008
Outlook excludes pre-opening expense and share-based compensation
expense. The Company estimates pre-opening expense will total $1.0
million during fiscal 2008. Conference Call to Discuss Second
Quarter Results MedCath Corporation (NASDAQ:MDTH) will host a
conference call Wednesday, May 7, at 9 a.m. Eastern Time to discuss
results from its second quarter ended March 31, 2008. The company
will issue a press release announcing those results prior to the
earnings call. What: Second Quarter Earnings Conference Call When:
9:00 a.m. ET, Wednesday, May 7, 2008 How: Dial-in conference call
(877) 697-5351 (domestic callers), (706) 634-0602 (international
callers) Conference ID: 44446703 Live web cast at
http://www.medcath.com/ Contacts: O. Edwin French, President &
CEO Art Parker, Interim Chief Financial Officer The conference call
will be archived and accessible by dialing (800) 642-1687 (domestic
callers) or (706) 645-9291 (international callers). The archived
conference ID is 44446703. The call will be accessible until 11:59
p.m. ET on May 14, 2008. It also will be available on the company's
web site (http://www.medcath.com/) on or immediately following May
7 for 30 days. MedCath Corporation, headquartered in Charlotte,
N.C., is a healthcare provider focused on high acuity services with
the diagnosis and treatment of cardiovascular disease being a
primary service offering. Following completion of the divestiture
of Dayton Heart Hospital, MedCath will own an interest in and
operate nine hospitals with a total of 616 licensed beds, located
in Arizona, Arkansas, California, Louisiana, New Mexico, South
Dakota, and Texas. MedCath is in the process of developing its
tenth hospital in Kingman, Arizona. In addition, MedCath and its
subsidiary MedCath Partners provide services in diagnostic and
therapeutic facilities in various states. 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
and other income, net; income tax expense; depreciation;
amortization; share-based compensation expense; pre-opening
expenses; loss on disposal of property, equipment and other assets;
loss on early extinguishment of debt; equity in net earnings of
unconsolidated affiliates; minority interest share of earnings of
consolidated subsidiaries, share-based compensation, and
pre-opening expenses. 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 analyses 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 accompanies this press release that
reconciles historical Adjusted EBITDA to MedCath's income from
continuing operations. 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 MedCath's Form 10-K filed with the Securities and
Exchange Commission on December 14, 2007, and MedCath' other
filings with the Securities and Exchange Commission. These filings
are available on the internet site of the Securities and Exchange
Commission at http://www.sec.gov/. EXHIBIT 99.1 MEDCATH CORPORATION
SUPPLEMENTAL FINANCIAL DISCLOSURE - RECONCILIATION OF GAAP
FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (Unaudited) The
following table reconciles preliminary Adjusted EBITDA with
MedCath's unaudited preliminary income from operations for the
second quarter ending March 31, 2008: Three Months Ended March 31,
2008 Range (in millions) Income from continuing operations $5.0
$5.6 Add: Income tax expense $3.5 $3.5 Minority interest share of
earnings of consolidated subsidiaries $5.2 $5.2 Equity in net
earnings of unconsolidated affiliates $(2.2) $(2.2) Interest
expense, net $3.4 $3.4 Loss on disposal of equipment $0.1 $0.1
Depreciation and amortization $7.9 $7.9 Pre-opening expenses $0.3
$0.3 Share-based compensation expense $0.2 $0.2 Adjusted EBITDA
$23.4 $24.0 The following table reconciles estimated Adjusted
EBITDA with MedCath's estimated income from operations excluding
pre-opening expenses and share- based compensation for the fiscal
year ending September 30, 2008: Fiscal 2008 Guidance Range (in
millions) Income from continuing operations excluding pre-opening
expense and share-based compensation expense $25.8 $27.4 Add:
Income tax expense $17.6 $18.3 Minority interest share of earnings
of consolidated subsidiaries $20.5 $21.1 Equity in net earnings of
unconsolidated affiliates $(9.1) $(9.2) Interest expense, net $13.2
$13.2 Depreciation and amortization $30.0 $30.2 Adjusted EBITDA
$98.0 $101.0 DATASOURCE: MedCath Corporation CONTACT: O. Edwin
French, President & Chief Executive Officer, +1-704- 708-6600;
Art Parker, Interim Chief Financial Officer, +1-704-708-6600 Web
site: http://www.medcath.com/
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