CHARLOTTE, N.C., Feb. 4 /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 first quarter of fiscal 2009, which ended December
31, 2008. Highlights -- Net revenue up 4.4% compared with first
quarter of fiscal 2008 -- Adjusted EBITDA of $17.2 million --
Operating cash flow from continuing operations of $18.2 million --
EPS from continuing operations of ($0.08); or $0.18, excluding loss
on debt refinancing, pre-opening expenses and share-based
compensation expense First Quarter 2009 Results MedCath's reported
net revenue increased 4.4% to $153.1 million in the first quarter
of fiscal 2009 from $146.7 million in the first quarter of fiscal
2008. Income from operations decreased to $7.9 million from $9.5
million in the first quarter of fiscal 2008 and Adjusted EBITDA
decreased to $17.2 million from $21.0 million in the same period of
the prior year. MedCath's income (loss) from continuing operations
was ($1.6) million, or ($0.08) per diluted share, in the first
quarter of fiscal 2009 compared to $2.3 million, or $0.11 per
diluted share, in the first quarter of fiscal 2008. MedCath's
operating results for the first quarter of fiscal 2009 include a
$7.0 million, or $0.23 per diluted share, decrease in income from
continuing operations related to loss on early extinguishment of
debt incurred from the company's entering into a new credit
facility in November 2008 and the repurchase of all of the
company's outstanding 9-7/8% Senior Notes in December 2008. MedCath
anticipates that the repurchase of the Senior Notes will be $0.19
accretive to its annual earnings per share. Adjusted EBITDA in this
release does not include share-based compensation or pre-opening
expenses, but these items are included as a component of income
from continuing operations. Share-based compensation expense
totaled $1.0 million in the first quarter of fiscal 2009, or $0.03
per diluted share, compared with a $3.7 million expense, or $0.12
per diluted share, in the first quarter of fiscal 2008. Pre-opening
expenses totaled $0.2 million in the first quarter of fiscal 2009,
compared with $0.3 million in the first quarter of fiscal 2008. As
shown below, EPS for the quarter, adjusted for loss on debt
refinance, share-based compensation expense and pre-opening
expenses totaled $0.18 for the quarter: EPS from continuing
operations $ (0.08) Adjustments (net of tax effect) Pre-opening
expenses $ 0.01 Share-based compensation expense $ 0.03 Loss on
Debt Refinancing $ 0.22 EPS, adjusted for above items $ 0.18 During
the first quarter of fiscal 2009, MedCath divested the 51.0%
ownership interest in a joint venture held in its MedCath Partners
Division. MedCath received approximately $6.9 million in cash
consideration for its ownership interest in the joint venture and
recognized a $4.0 million gain in income from discontinued
operations, net of taxes. The joint venture had net revenue of $2.6
million, Adjusted EBITDA of $0.7 million, net income of $0.2
million and earnings per share of $0.01 for the fiscal quarter
ended December 31, 2008. The operating results for this joint
venture are included in MedCath's discontinued operations for the
first quarter of fiscal 2009. "We are pleased with our first
quarter results and progress we're making toward our strategic
transformation and plans to diversify our services," said Ed
French, MedCath's President and Chief Executive Officer. "We
experienced solid sequential earnings growth and margin expansion;
and our cash flow from operations was extremely strong. Our
expansion plans continue to move forward as planned, and we look to
add 149 beds during the next 10 months." Operating Statistics, Cash
Flow and Capital Expenditures Same facility hospital admissions in
the first quarter of fiscal 2009 were 6,757, down 5.5% compared
with the first quarter of fiscal 2008. Adjusted admissions totaled
9,874, up 0.5% compared with the first quarter of fiscal 2008. Same
facility hospital outpatient visits totaled 7,499 in the first
quarter of fiscal 2009, up 16.3% in comparison with the first
quarter of fiscal 2008. MedCath's commercial admissions of 23.6%
were unchanged from the year earlier period and the fourth quarter
of fiscal 2008. Self-pay admissions equaled 2.2% of total
admissions in the first quarter of fiscal 2009, in comparison to
2.4% of total admissions in the first quarter of fiscal 2008. Total
uncompensated care, which includes charity care plus bad debt
expense, equaled 8.5% of hospital division net revenue before the
deduction for charity care in the first quarter of fiscal 2009
compared to 9.2% in the first quarter of fiscal 2008 and 10.4% in
the fourth quarter of fiscal 2008. Net cash provided by operating
activities of continuing operations for the first quarter of fiscal
2009 was $18.2 million, which reflects the payment of approximately
$2.5 million in interest expense from an earlier quarter in
connection with the repurchase of the Senior Notes. Net cash
provided by operating activities of continuing operations for the
first quarter of fiscal 2008 was breakeven. Cash capital
expenditures totaled $30.0 million and included $6.3 million
related to maintenance expenditures and $23.7 million related to
MedCath's construction projects not opened. 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; 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 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 Thursday, February 5, 2009, 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
82073996. 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, March 5, 2009. To access the replay,
domestic callers should dial (800) 642-1687 and international
callers should dial (706) 645-9291. The archived conference ID is
82073996. 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. MedCath owns an interest in and operates nine
hospitals with a total of 676 licensed beds, located in Arizona,
Arkansas, California, Louisiana, New Mexico, South Dakota, and
Texas. MedCath is in the process of developing its tenth hospital,
which is anticipated to open in fall 2009, in Kingman, Ariz. 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. The
preparation of MedCath's first quarter operating results requires
management to make estimates and assumptions that affect reported
amounts of revenues and expenses. There is a reasonable possibility
that actual results may vary significantly from those estimates.
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, 2008 filed with the Securities and Exchange
Commission on December 15, 2008. 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 December 31, 2008 2007
Net revenue $153,103 $146,695 Operating expenses: Personnel expense
50,656 50,384 Medical supplies expense 42,651 38,742 Bad debt
expense 11,393 11,285 Other operating expenses 32,235 29,016
Pre-opening expenses 207 248 Depreciation 7,835 7,341 Amortization
149 127 Loss on disposal of property, equipment and other assets 73
28 Total operating expenses 145,199 137,171 Income from operations
7,904 9,524 Other income (expenses): Interest expense (2,857)
(3,931) Loss on early extinguishment of debt (6,961) - Interest and
other income, net 100 1,158 Equity in net earnings of
unconsolidated affiliates 2,065 2,025 Total other expenses, net
(7,653) (748) Income from continuing operations before minority
interest and income taxes 251 8,776 Minority interest share of
earnings of consolidated subsidiaries (2,776) (4,137) Income from
continuing operations before income taxes (2,525) 4,639 Income tax
(benefit)/expense (909) 2,348 (Loss)/income from continuing
operations (1,616) 2,291 Income from discontinued operations, net
of taxes 3,862 773 Net income $2,246 $3,064 Earnings (loss) per
share, basic Continuing operations $(0.08) $0.11 Discontinued
operations 0.19 0.03 Earnings (loss) per share, basic $0.11 $0.14
Earnings (loss) per share, diluted Continuing operations $(0.08)
$0.11 Discontinued operations 0.19 0.03 Earnings (loss) per share,
diluted $0.11 $0.14 Weighted average number of shares, basic 19,599
21,028 Dilutive effect of stock options and restricted stock - 263
Weighted average number of shares, diluted 19,599 21,291 MEDCATH
CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share
data) December 31, September 30, 2008 2008 (Unaudited) Current
assets: Cash and cash equivalents $56,912 $93,836 Restricted cash
3,163 3,154 Accounts receivable, net 86,572 83,875 Income tax
receivable, net 1,696 3,091 Medical supplies 17,838 15,479 Deferred
income tax assets 9,978 9,769 Prepaid expenses and other current
assets 10,439 9,796 Current assets of discontinued operations
12,770 20,776 Total current assets 199,368 239,776 Property and
equipment, net 341,942 323,729 Investments in affiliates 10,742
15,285 Goodwill 60,174 60,174 Other intangible assets, net 5,914
6,063 Other assets 9,748 8,378 Long-term assets of discontinued
operations - 51 Total assets $627,888 $653,456 Current liabilities:
Accounts payable $42,128 $41,642 Accrued compensation and benefits
17,283 16,872 Other accrued liabilities 21,080 24,054 Current
portion of long-term debt and obligations under capital leases
15,341 31,920 Current liabilities of discontinued operations 9,510
10,184 Total current liabilities 105,342 124,672 Long-term debt
115,578 115,628 Obligations under capital leases 1,956 2,087
Deferred income tax liabilities 12,276 12,352 Other long-term
obligations 4,425 4,454 Total liabilities 239,577 259,193 Minority
interest in equity of consolidated subsidiaries 15,880 24,667
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; 21,588,880 issued and 19,634,519
outstanding at December 31, 2008; 21,553,054 issued and 19,598693
outstanding at September 30, 2008 216 216 Paid-in capital 456,531
455,494 Accumulated deficit (38,892) (41,138) Accumulated other
comprehensive loss (627) (179) Treasury stock, at cost; 1,954,361
shares at December 31, 2008 1,954,361 shares at September 30, 2008
(44,797) (44,797) Total stockholders' equity 372,431 369,596 Total
liabilities and stockholders' equity $627,888 $653,456 MEDCATH
CORPORATION SELECTED OPERATING DATA (In thousands, except per share
data and selected operating data) (Unaudited) Three Months Ended
December 31, 2008 2007 % Change Statement of Operations Data: Net
revenue $153,103 $146,695 4.4 % Adjusted EBITDA (1) $17,166 $20,977
(18.2)% Income from operations $7,904 $9,524 (17.0)% (Loss)/income
from continuing operations $(1,616) $2,291 (170.5)% Earnings (loss)
per share from continuing operations, basic $(0.08) $0.11 (172.7)%
Earnings (loss) per share from continuing operations, diluted
$(0.08) $0.11 (172.7)% (1) See Supplemental Financial
Disclosure--Reconciliation of GAAP Financial Measures to Non-GAAP
Financial Measures. Three Months Ended December 31, 2008 2007 %
Change Selected Operating Data ( a ): Number of hospitals 7 7
Licensed beds ( c ) 509 421 Staffed and available beds ( d ) 463
404 Admissions ( e ) 6,757 7,150 (5.5)% Adjusted admissions ( f )
9,874 9,829 0.5% Patient days ( g ) 25,181 25,460 (1.1)% Adjusted
patient days ( h ) 37,044 35,144 5.4% Average length of stay (days)
( i ) 3.73 3.56 4.8% Occupancy ( j ) 59.1% 68.5% Inpatient
catheterization procedures ( k ) 3,552 4,049 (12.3)% Inpatient
surgical procedures ( l ) 2,001 1,947 2.8% Hospital net revenue
$144,225 $137,151 5.2% Combined Operating Data ( b ): Number of
hospitals 9 9 Licensed beds ( c ) 676 588 Staffed and available
beds ( d ) 628 567 Admissions ( e ) 9,740 9,769 (0.3)% Adjusted
admissions ( f ) 14,622 14,167 3.2% Patient days ( g ) 34,189
33,725 1.4% Adjusted patient days ( h ) 51,162 48,482 5.5% Average
length of stay (days) ( i ) 3.51 3.45 1.7% Occupancy ( j ) 59.2%
64.7% Inpatient catheterization procedures ( k ) 4,385 4,776 (8.2)%
Inpatient surgical procedures ( l ) 2,622 2,686 (2.4)% Hospital net
revenue $185,023 $176,706 4.7% ( 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 ) 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 unaudited
consolidated financial statements for the three months ended
December 31, 2008 and 2007. Three Months Ended December 31, 2008
2007 (in thousands) (Loss)/income from continuing operations
$(1,616) $2,291 Add: Income tax expense (909) 2,348 Minority
interest share of earnings of consolidated subsidiaries 2,776 4,137
Equity in net earnings of unconsolidated affiliates (2,065) (2,025)
Interest and other income, net (100) (1,158) Loss on early
extinguishment of debt 6,961 - Interest expense 2,857 3,931 Loss on
disposal of property, equipment and other assets 73 28 Amortization
149 127 Depreciation 7,835 7,341 Pre-opening expenses 207 248
Share-based compensation expense 998 3,709 Adjusted EBITDA $17,166
$20,977 DATASOURCE: MedCath Corporation CONTACT: O. Edwin French,
President - Chief Executive Officer, +1-704-708-6600, or Jeff
Hinton, Chief Financial Officer, +1-704-708-6600, both of MedCath
Corporation Web site: http://www.medcath.com/
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