-- Same facility adjusted admissions up 4.6% in second quarter of
fiscal 2008 compared to the second quarter of fiscal 2007
CHARLOTTE, N.C., May 6 /PRNewswire-FirstCall/ -- MedCath
Corporation (NASDAQ:MDTH), a healthcare provider focused on high
acuity healthcare services, predominately the diagnosis and
treatment of cardiovascular disease, today announced its operating
results for its second fiscal quarter, which ended March 31, 2008.
Second Quarter 2008 Results On April 21, 2008 MedCath announced
preliminary results for the second quarter of fiscal 2008. This
press release presents the final results for the quarter on an
actual and a same facility basis. During its fourth quarter of
fiscal 2007, MedCath completed the recapitalization of Harlingen
Medical Center ("HMC"). As part of the recapitalization, MedCath's
ownership in HMC was reduced from a majority ownership to a
minority ownership. Due to this change in ownership, MedCath began
accounting for HMC as an equity investment in the quarter ended
September 30, 2007. As such, MedCath's consolidated operating
results for the quarter ended March 31, 2008 exclude net revenue,
income from operations and Adjusted EBITDA of HMC. In comparison,
MedCath's consolidated actual results for the comparable quarter of
the previous fiscal year include the consolidated financial results
of HMC. During its second quarter of fiscal 2008, MedCath announced
that it had entered into a definitive agreement to sell
substantially all of the assets of its Dayton Heart Hospital,
located in Dayton, Ohio. As such, MedCath now accounts for Dayton
Heart Hospital as an asset held for sale for all periods presented.
Any reference to same facility results in this press release
excludes HMC and Dayton Heart Hospital for the second quarter of
fiscal 2007. MedCath's reported net revenue decreased 11.0% to
$157.1 million in the second quarter of fiscal 2008 from $176.6
million in the second quarter of fiscal 2007, which included $23.9
million attributable to HMC. On a same facility basis, net revenue
increased 2.8% from $152.8 million. Income from operations
decreased 1.3% to $15.4 million in the second quarter of fiscal
2008 from $15.6 million in the second quarter of fiscal 2007. On a
same facility basis, income from operations increased 19.4% from
$12.9 million. Adjusted EBITDA decreased 11.2% to $23.8 million in
the second quarter of fiscal 2008 from $26.8 million in the second
quarter of fiscal 2007. On a same facility basis, Adjusted EBITDA
increased 5.3%. Income from continuing operations was $6.0 million,
or $0.30 per diluted share, in the second quarter of fiscal 2008,
compared to income from continuing operations of $4.7 million, or
$0.22 per diluted share, in the second quarter of fiscal 2007. On a
same facility basis, MedCath's second quarter of fiscal 2007 income
from continuing operations would have been $3.9 million, or $0.18
per diluted share, had HMC been accounted for as an equity
investment in the second quarter of fiscal 2007. MedCath's
operating results for the quarter ended March 31, 2008 reflects a
$0.2 million decrease in net revenue and Adjusted EBITDA related to
settlement of third-party cost reports. In comparison, MedCath's
operating results for the quarter ended March 31, 2007 reflect a
$3.1 million reduction in net revenue and Adjusted EBITDA due to an
increase in a reserve previously established for repayment of a
portion of Medicare reimbursement. Share-based compensation expense
totaled $0.2 million in the second quarter of fiscal 2008, or $0.01
per diluted share, compared to $2.1 million, or $0.05 per diluted
share, in the second quarter of fiscal 2007. Pre-opening expenses
totaled $0.3 million, or $0.02 per diluted share, in the second
quarter of fiscal 2008. MedCath did not incur pre-opening expenses
in the second quarter of fiscal 2007. Adjusted EBITDA in this
release does not include share-based compensation expense or
pre-opening expenses, but these expenses are included as a
component of income from continuing operations. "Our quarterly
results affirm our strategic direction to increase our bed capacity
and asset base to diversify our service lines and revenue," said O.
Edwin French, MedCath's President and Chief Executive Officer.
"Though we're not immune to industry pressures, as we grow our
small facilities and add incremental revenues, we expect to see
commensurate earnings growth. In the meantime, as we evolve we have
grown income from continuing operations and earnings per share
year-over-year while continuing to tell the quality story.
Operating Statistics, Cash Flow and Capital Expenditures Same
facility hospital adjusted admissions for the second quarter of
fiscal 2008 increased 4.6% from the second quarter of the prior
fiscal year. Same facility hospital net revenue increased 4.7%, or
2.3% after adjusting second quarter of 2008's revenue for a $0.2
million cost report settlement, and 2007's revenue for a reserve
that reduced net revenue by $3.1 million. Net cash provided by
operating activities of continuing operations for the second
quarter of fiscal 2008 was $15.4 million, up from $13.1 million for
the second quarter of fiscal 2007. Capital expenditures, including
$4.6 million in expenditures related to MedCath's growth
initiatives, totaled $13.0 million in the second quarter of fiscal
2008 in comparison to $6.6 million in the second quarter of fiscal
2007. 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. Management
will discuss and answer questions regarding MedCath's quarterly
results Wednesday, May 7, 2008, during a 9 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
44446703. 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 14, 2008. To access the replay,
domestic callers should dial (800) 642-1687 and international
callers should dial (706) 645-9291. The archived conference ID is
44446703. 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 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. 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
including, but not limited to, enactment of changes in federal law
that would limit physician hospital ownership. 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 Annual Report or Form 10-K for the year
ended September 30, 2007 filed with the Securities and Exchange
Commission on December 14, 2007. Copies of this form including
exhibits are 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, 2008 2007 2008 2007 Net revenue $157,098 $176,640
$305,948 $337,026 Operating expenses: Personnel expense 49,638
55,977 100,503 107,918 Medical supplies expense 43,097 47,099
82,726 91,254 Bad debt expense 10,332 14,635 21,617 27,762 Other
operating expenses 30,419 34,257 59,565 67,358 Pre-opening expenses
245 - 493 - Depreciation 7,709 8,180 15,074 16,450 Amortization 135
127 262 379 Loss on disposal of property, equipment and other
assets 138 796 166 853 Total operating expenses 141,713 161,071
280,406 311,974 Income from operations 15,385 15,569 25,542 25,052
Other income (expenses): Interest expense (3,864) (5,693) (7,796)
(13,028) Loss on early extinguishment of debt - (662) - (5,142)
Interest and other income, net 488 1,805 1,657 4,525 Equity in net
earnings of unconsolidated affiliates 2,181 1,482 4,206 2,920 Total
other expenses, net (1,195) (3,068) (1,933) (10,725) Income from
continuing operations before minority interest and income taxes
14,190 12,501 23,609 14,327 Minority interest share of earnings of
consolidated subsidiaries (5,114) (3,268) (9,566) (5,474) Income
from continuing operations before income taxes 9,076 9,233 14,043
8,853 Income tax expense 3,099 4,504 5,448 4,486 Income from
continuing operations 5,977 4,729 8,595 4,367 Income (loss) from
discontinued operations, net of taxes (292) 1,521 154 (3,013) Net
income $5,685 $6,250 $8,749 $1,354 Earnings (loss) per share, basic
Continuing operations $0.30 $0.23 $0.42 $0.21 Discontinued
operations (0.01) 0.07 0.01 (0.14) Earnings per share, basic $0.29
$0.30 $0.43 $0.07 Earnings (loss) per share, diluted Continuing
operations $0.30 $0.22 $0.41 $0.20 Discontinued operations (0.01)
0.07 0.01 (0.14) Earnings per share, diluted $0.29 $0.29 $0.42
$0.06 Weighted average number of shares, basic 19,841 21,019 20,438
20,568 Dilutive effect of stock options and restricted stock 121
625 202 634 Weighted average number of shares, diluted 19,962
21,644 20,640 21,202 MEDCATH CORPORATION CONSOLIDATED BALANCE
SHEETS (In thousands, except share data) March 31, September 30,
2008 2007 (Unaudited) Current assets: Cash and cash equivalents
$85,256 $140,276 Restricted cash 8,500 - Accounts receivable, net
99,529 85,943 Medical supplies 15,583 13,928 Deferred income tax
assets 13,560 12,389 Prepaid expenses and other current assets
5,663 6,197 Current assets of discontinued operations 3,273 13,680
Income tax expense Total current assets 231,364 272,413 Property
and equipment, net 281,365 270,663 Investments in affiliates 4,850
5,718 Goodwill 62,740 62,740 Other intangible assets, net 6,187
6,448 Other assets 6,420 6,531 Long-term assets of discontinued
operations 26,544 44,902 Total assets $619,470 $669,415 Current
liabilities: Accounts payable $34,754 $30,933 Income tax payable
1,492 10,552 Accrued compensation and benefits 17,094 18,567 Other
accrued liabilities 12,065 13,421 Current portion of long-term debt
and obligations under capital leases 4,504 4,089 Current
liabilities of discontinued operations 6,090 15,810 Total current
liabilities 75,999 93,372 Long-term debt 144,394 146,398
Obligations under capital leases 1,514 1,793 Deferred income tax
liabilities 11,855 12,018 Other long-term obligations 415 460
Long-term liabilities of discontinued components 853 13 Total
liabilities 235,030 254,054 Minority interest in equity of
consolidated subsidiaries 27,752 29,737 Stockholders' equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized;
none issued - - Common stock, $0.01 par value, 50,000,000 shares
authorized; 21,451,144 issued and 19,496,783 outstanding at March
31, 2008; 21,271,144 issued and 21,202,244 outstanding at September
30, 2007 215 213 Paid-in capital 454,956 447,688 Accumulated
deficit (53,379) (61,821) Accumulated other comprehensive loss
(307) (62) Treasury stock, at cost; 68,900 shares at March 31, 2007
1,954,361 shares at March 31, 2008 (44,797) (394) Total
stockholders' equity 356,688 385,624 Total liabilities and
stockholders' equity $619,470 $669,415 MEDCATH CORPORATION SELECTED
OPERATING DATA (In thousands, except per share data and selected
operating data) (Unaudited) Three Months Ended March 31, 2008 2007
% Change Statement of Operations Data: Net revenue $157,098
$176,640 (11.1)% Adjusted EBITDA (1) $23,825 $26,772 (11.0)% Income
from operations $15,385 $15,569 (1.2)% Income from continuing
operations $5,977 $4,729 26.4% Earnings per share from continuing
operations, basic $0.30 $0.23 30.4% Earnings per share from
continuing operations, diluted $0.30 $0.22 36.4% Six Months Ended
March 31, 2008 2007 % Change Statement of Operations Data: Net
revenue $305,948 $337,026 (9.2)% Adjusted EBITDA (1) $45,459
$45,860 (0.9)% Income from operations $25,542 $25,052 2.0% Income
from continuing operations $8,595 $4,367 96.8% Earnings per share
from continuing operations, basic $0.42 $0.21 100.0% Earnings per
share from continuing operations, diluted $0.41 $0.20 105.0% (1)
See Supplemental Financial Disclosure--Reconciliation of GAAP
Financial Measures to Non-GAAP Financial Measures. Three Months
Ended March 31, 2008 2007 % Change Selected Operating Data (a):
Number of hospitals 7 8 Licensed beds (c) 449 533 Staffed and
available beds (d) 433 512 Admissions (e) 7,855 9,876 (20.5)%
Adjusted admissions (f) 10,817 13,470 (19.7)% Patient days (g)
29,039 34,010 (14.6)% Adjusted patient days (h) 40,247 46,173
(12.8)% Average length of stay (days) (i) 3.70 3.44 7.6% Occupancy
(j) 73.7% 73.8% Inpatient catheterization procedures (k) 4,225
4,904 (13.8)% Inpatient surgical procedures (l) 2,120 2,565 (17.3)%
Hospital net revenue $144,778 $162,092 (10.7)% Selected Operating
Data - Same Facility (a): Number of hospitals 7 7 Licensed beds (c)
449 421 Staffed and available beds (d) 433 404 Admissions (e) 7,855
7,929 (0.9)% Adjusted admissions (f) 10,817 10,338 4.6% Patient
days (g) 29,039 28,156 3.1% Adjusted patient days (h) 40,247 36,755
9.5% Average length of stay (days) (i) 3.70 3.55 4.2% Occupancy (j)
73.7% 77.4% Inpatient catheterization procedures (k) 4,225 4,666
(9.5)% Inpatient surgical procedures (l) 2,120 2,049 3.5% Hospital
net revenue $144,778 $138,213 4.7% Combined Operating Data (b):
Number of hospitals 9 9 Licensed beds (c) 616 588 Staffed and
available beds (d) 596 567 Admissions (e) 10,539 10,819 (2.6)%
Adjusted admissions (f) 15,164 14,533 4.3% Patient days (g) 37,812
37,716 0.3% Adjusted patient days (h) 54,130 50,349 7.5% Average
length of stay (days) (i) 3.59 3.49 2.9% Occupancy (j) 69.7% 73.9%
Inpatient catheterization procedures (k) 5,025 5,523 (9.0)%
Inpatient surgical procedures (l) 2,754 2,832 (2.8)% Hospital net
revenue $186,045 $179,263 3.8% Six Months Ended March 31, 2008 2007
% Change Selected Operating Data (a): Number of hospitals 7 8
Licensed beds (c) 449 533 Staffed and available beds (d) 433 512
Admissions (e) 15,005 18,802 (20.2)% Adjusted admissions (f) 20,645
25,745 (19.8)% Patient days (g) 54,499 64,880 (16.0)% Adjusted
patient days (h) 75,381 88,422 (14.7)% Average length of stay
(days) (i) 3.63 3.45 5.2% Occupancy (j) 68.8% 69.6% Inpatient
catheterization procedures (k) 8,685 9,279 (6.4)% Inpatient
surgical procedures (l) 3,180 4,851 (34.4)% Hospital net revenue
$281,929 $311,062 (9.4)% Selected Operating Data - Same Facility
(a): Number of hospitals 7 7 Licensed beds (c) 449 421 Staffed and
available beds (d) 433 404 Admissions (e) 15,005 15,020 (0.1)%
Adjusted admissions (f) 20,645 19,576 5.5% Patient days (g) 54,499
53,769 1.4% Adjusted patient days (h) 75,381 70,297 7.2% Average
length of stay (days) (i) 3.63 3.58 1.4% Occupancy (j) 68.8% 73.1%
Inpatient catheterization procedures (k) 8,685 8,861 (2.0)%
Inpatient surgical procedures (l) 3,180 4,185 (24.0)% Hospital net
revenue $281,929 $268,729 4.9% Combined Operating Data (b): Number
of hospitals 9 9 Licensed beds (c) 616 588 Staffed and available
beds (d) 596 567 Admissions (e) 20,308 20,707 (1.9)% Adjusted
admissions (f) 29,326 27,886 5.2% Patient days (g) 71,537 72,166
(0.9)% Adjusted patient days (h) 102,599 96,611 6.2% Average length
of stay (days) (i) 3.52 3.49 0.9% Occupancy (j) 65.6% 69.9%
Inpatient catheterization procedures (k) 10,212 10,521 (2.9)%
Inpatient surgical procedures (l) 4,553 5,385 (15.5)% Hospital net
revenue $362,751 $345,552 5.0% (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. Same facility
for all periods presented excludes Harlingen Medical Center. (b)
Combined operating data includes hospitals in operation as of the
end of the period reported in continuing operations including
hospitals which are accounted for using the equity method in our
consolidated financial statements. (c) 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. (d) Staffed and available beds represent the number of
beds that are readily available for patient use at the end of the
period. (e) Admissions represent the number of patients admitted
for inpatient treatment. (f) 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.
(g) Patient days represent the total number of days of care
provided to inpatients. (h) 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. (i) Average length of stay (days) represents the average
number of days inpatients stay in our hospitals. (j) 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. (k) Inpatients with a catheterization procedure
represent the number of inpatients with a procedure performed in
one of the hospitals' catheterization labs during the period. (l)
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 from continuing operations as derived directly from
MedCath's consolidated financial statements for the three and six
months ended March 31, 2008 and 2007. Three Months Ended Six Months
Ended March 31, March 31, 2008 2007 2008 2007 (in thousands) Income
from continuing operations $5,977 $4,729 $8,595 $4,367 Add: Income
tax expense 3,099 4,504 5,448 4,486 Minority interest share of
earnings of consolidated subsidiaries 5,114 3,268 9,566 5,474
Equity in net earnings of unconsolidated affiliates (2,181) (1,482)
(4,206) (2,920) Interest and other income, net (488) (1,805)
(1,657) (4,525) Loss on early extinguishment of debt - 662 - 5,142
Interest expense 3,864 5,693 7,796 13,028 Loss on disposal of
property, equipment and other assets 138 796 166 853 Amortization
135 127 262 379 Depreciation 7,709 8,180 15,074 16,450 Pre-opening
expenses 245 - 493 - Share-based compensation expense 213 2,100
3,922 3,126 Adjusted EBITDA $23,825 $26,772 $45,459 $45,860 The
following table presents MedCath's condensed statement of
operations data for the three and six months ended March 31, 2008
on a pro forma basis to reflect the reclassification of Harlingen
Medical Center (HMC) from a consolidated subsidiary to an equity
investment. Three Months Ended March 31, Adjustments 2007 2007 to
Decon- (Pro Forma 2008 (Actual) solidate Same HMC Facility) (in
thousands) Net Revenue $176,640 $(23,879) $152,761 $157,098 Income
from operations 15,569 (2,695) 12,874 15,385 Income from continuing
operations before minority interest and income taxes 12,501 (840)
11,661 14,190 Income from continuing operations before income taxes
9,233 (840) 8,393 9,076 Income from continuing operations 4,729
(840) 3,889 5,977 Net income (loss) $6,250 $(840) $5,410 $5,685
Earnings (loss) per share, basic $0.30 $(0.04) $0.26 $0.29 Earnings
(loss) per share, diluted $0.29 $(0.04) $0.25 $0.29 Weighted
average number of shares, basic 21,019 - 21,019 19,841 Dilutive
effect of stock options and restricted stock 625 - 625 121 Weighted
average number of shares, diluted 21,644 - 21,644 19,962 Six Months
Ended March 31, Adjustments 2007 2007 to Decon- (Pro Forma 2008
(Actual) solidate Same HMC Facility) (in thousands) Net Revenue
$337,026 $(42,333) $294,693 $305,948 Income from operations 25,052
(3,545) 21,507 25,542 Income from continuing operations before
minority interest and income taxes 14,327 (491) 13,836 23,609
Income from continuing operations before income taxes 8,853 (491)
8,362 14,043 Income from continuing operations 4,367 (491) 3,876
8,595 Net income (loss) $1,354 $(491) $863 $8,749 Earnings (loss)
per share, basic $0.07 $(0.02) $0.05 $0.43 Earnings (loss) per
share, diluted $0.06 $(0.02) $0.04 $0.42 Weighted average number of
shares, basic 20,568 - 20,568 20,438 Dilutive effect of stock
options and restricted stock 634 - 634 202 Weighted average number
of shares, diluted 21,202 - 21,202 20,640 DATASOURCE: MedCath
Corporation CONTACT: O. Edwin French, President/Chief Executive
Officer, or Art Parker, Interim Chief Financial Officer, both of
MedCath Corporation, +1-704-708-6600 Web site:
http://www.medcath.com/
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