CHARLOTTE, N.C., Aug. 5 /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 third quarter which ended June 30, 2009. Highlights
-- A 6.1% increase in patient visits, including inpatient and
outpatient cases, and emergency department visits, compared to the
third quarter of fiscal 2008. -- Operating cash flow from
continuing operations of $18.7 million. -- EPS from continuing
operations of $0.03 or Adjusted EPS from continuing operations of
$0.22, excluding pre-opening expense, stock-based compensation
expense and other items. Third Quarter 2009 Results MedCath's
reported net revenue decreased 2.2% to $150.9 million in the third
quarter of fiscal 2009 from $154.3 million in the third quarter of
fiscal 2008. Income from operations decreased to $2.2 million from
$13.2 million in the third quarter of fiscal 2008 and Adjusted
EBITDA decreased to $11.3 million from $22.7 million in the same
period of the prior year. MedCath's income from continuing
operations was $0.6 million, or $0.03 per diluted share, in the
third quarter of fiscal 2009 compared to $4.9 million, or $0.25 per
diluted share, in the third quarter of fiscal 2008. "We continue to
move forward on our transformation strategy by increasing capacity
to diversify our Company's service offering," said Ed French,
MedCath's President and Chief Executive Officer. "During the
quarter, we completed expansion of our Louisiana Medical Center and
Heart Hospital, adding 79 beds to the hospital's infrastructure,
and we are on pace to open the Hualapai Mountain Medical Center in
October. The addition of this new capacity will allow us to expand
the population of patients that can benefit from our proven
high-level of care. We are affirmed in our strategy to diversify
and mitigate risk associated with single-product reliance as we
have embarked upon our expansion investments." MedCath's operating
results for the third quarter of fiscal 2009 reflect the following
items: -- $2.7 million, or $0.08, net per diluted share of the
decrease in net revenue and Adjusted EBITDA related to a reduction
in the estimated amount of Medicare Disproportionate Share Hospital
(DSH) payments certain hospitals were eligible for in prior fiscal
years. The primary method for a hospital to qualify for Medicare
DSH reimbursement is based on a statutory formula that utilizes the
percentage of inpatient days attributable to patients eligible for
Medicaid, but not eligible for Medicare Part A, and a base formula
called the Supplemental Security Income (SSI) percentage, which is
released annually by the Centers for Medicare and Medicaid Services
(CMS). Based on the updated SSI percentage provided by CMS in June
2009, MedCath has determined that four hospitals that were
previously determined to be eligible for DSH payments in fiscal
2007 and fiscal 2008 would either no longer be eligible for such
payments or would be eligible for less payment than initially
estimated. -- $0.4 million, or $0.01, net per diluted share of the
decrease in Adjusted EBITDA related to the reduction in the
estimated amount of charges eligible for Medicaid reimbursement
from fiscal 2004 to 2006, which resulted in an updated cost to
charge ratio at one of our hospitals. -- $1.1 million, or $0.03,
net per diluted share, of the decrease in Adjusted EBITDA related
to professional fees associated with an internal assessment of
certain controls and procedures completed during the quarter. --
$0.8 million, or net impact of $0.03, net per diluted share of the
decrease in Adjusted EBITDA reflects the anticipated settlement of
Medicare claims at two of our hospitals related to the
identification, return and self-reporting of $0.7 million in
reimbursement for certain procedures performed at the two hospitals
in prior fiscal years. -- $0.4 million, or $0.01 net per diluted
share, of the decrease in Adjusted EBITDA related to severance
expense. Adjusted EBITDA excludes share-based compensation and
pre-opening expenses, but these items are included as a component
of income from continuing operations. Share-based compensation
expense totaled $0.2 million in the third quarter of fiscal 2009,
or $0.01 per diluted share, compared to a $1.5 million expense, or
$0.05 per diluted share, in the third quarter of fiscal 2008.
Pre-opening expenses totaled $0.8 million in the third quarter of
fiscal 2009, or $0.02 per diluted share, compared to $0.1 million
in the third quarter of fiscal 2008. Operating Statistics, Cash
Flow and Capital Expenditures Same facility hospital admissions in
the third quarter of fiscal 2009 were 6,352, down 14.0% compared
with the third quarter of fiscal 2008. Adjusted admissions totaled
10,284, in line with the third quarter of fiscal 2008. Same
facility hospital outpatient cases totaled 8,866 in the third
quarter of fiscal 2009, up 15.7% in comparison with the third
quarter of fiscal 2008. Total uncompensated care, which includes
charity care plus bad debt expense, equaled 9.3% of hospital
division net patient revenue before the deduction for charity care
in the third quarter of fiscal 2009 and the third quarter of fiscal
2008. Net cash provided by operating activities of continuing
operations for the third quarter of fiscal 2009 was $18.7 million
compared to $18.9 million in the third quarter of fiscal 2008. Cash
paid for capital expenditures during the quarter totaled $18.6
million, which included $4.8 million related to maintenance
expenditures and $13.8 million related to MedCath's construction
projects. Use of Non-GAAP Financial Measures Included in this press
release and the supplemental financial information furnished
herewith are certain financial measures that are not generally
accepted accounting principles ("non-GAAP"), such as Adjusted
earnings before interest, taxes, depreciation, and amortization
("Adjusted EBITDA") and Adjusted diluted earnings per share from
continuing operations ("Adjusted EPS"). Adjusted EBITDA represents
MedCath's income from continuing operations before interest
expense; loss on early extinguishment of debt; income tax expense;
depreciation; amortization; share-based compensation expense;
(gain) loss on disposal of property, equipment and other assets;
interest and other income; equity in net earnings of unconsolidated
affiliates; minority interest share of earnings of consolidated
subsidiaries; and pre-opening expenses. Adjusted EPS represents
MedCath's diluted earnings per share from continuing operations for
the three months ended June 30, 2009 adjusted for Medicare
Disproportionate Share Hospital ("DSH") adjustments, reduction in
Medicaid reimbursements, professional fees for an internal control
assessment, settlement of Medicare claims, severance expense,
share-based compensation, and pre-opening expenses. MedCath's
management uses Adjusted EBITDA to measure the performance of
MedCath's various operating entities, to compare actual results to
historical and budgeted results, and to make capital allocation
decisions. Management provides Adjusted EBITDA and Adjusted EPS 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 and/or Adjusted
EPS as a financial performance measure. Because Adjusted EBITDA and
Adjusted EPS are non-GAAP measures, Adjusted EBITDA and Adjusted
EPS, 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 and Adjusted
EPS to diluted EPS from continuing operations. Management will
discuss and answer questions regarding MedCath's quarterly results
on Thursday, August 6, 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
21652039. 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, August 20, 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 21652039. 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 755 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 third quarter operating results required
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, as updated in our Quarterly Report
on Form 10-Q for the fiscal quarter ended March 31, 2009. Copies of
our filings with the Securities and Exchange Commission, including
exhibits, are available at http://www.sec.gov/. MEDCATH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per
share data) (Unaudited) Three Months Ended Nine Months Ended June
30, June 30, -------- -------- 2009 2008 2009 2008 ---- ---- ----
---- Net revenue $150,904 $154,273 $462,874 $455,168 Operating
expenses: Personnel expense 50,862 50,520 153,644 150,060 Medical
supplies expense 44,995 42,757 131,457 123,155 Bad debt expense
12,547 10,235 34,558 31,852 Other operating expenses 31,441 29,555
96,022 88,996 Pre-opening expenses 754 149 1,340 643 Depreciation
7,858 7,505 23,258 22,535 Amortization 230 149 589 411 (Gain) loss
on disposal of property, equipment and other assets (26) 225 138
391 --- --- --- --- Total operating expenses 148,661 141,095
441,006 418,043 ------- ------- ------- ------- Income from
operations 2,243 13,178 21,868 37,125 Other income (expenses):
Interest expense (1,151) (3,862) (5,339) (11,658) Loss on early
extinguishment of debt - - (6,702) - Interest and other income 52
284 218 1,930 Equity in net earnings of unconsolidated affiliates
2,265 2,636 7,044 6,842 ----- ----- ----- ----- Total other income
(expense), net 1,166 (942) (4,779) (2,886) ----- ---- ------ ------
Income from continuing operations before minority interest and
income taxes 3,409 12,236 17,089 34,239 Minority interest share of
earnings of consolidated subsidiaries (2,287) (3,865) (9,703)
(12,644) ------ ------ ------ ------- Income from continuing
operations before income taxes 1,122 8,371 7,386 21,595 Income tax
expense 536 3,469 2,998 8,917 --- ----- ----- ----- Income from
continuing operations 586 4,902 4,388 12,678 (Loss) income from
discontinued operations, net of taxes (90) 6,870 3,936 7,843 ---
----- ----- ----- Net income $496 $11,772 $8,324 $20,521 ====
======= ====== ======= Earnings per share, basic Continuing
operations $0.03 $0.25 $0.22 $0.62 Discontinued operations (0.00)
0.35 0.20 0.38 ----- ---- ---- ---- Earnings per share, basic $0.03
$0.60 $0.42 $1.00 ----- ----- ----- ----- Earnings per share,
diluted Continuing operations $0.03 $0.25 $0.22 $0.62 Discontinued
operations (0.00) 0.35 0.20 0.38 ----- ---- ---- ---- Earnings per
share, diluted $0.03 $0.60 $0.42 $1.00 ----- ----- ----- -----
Weighted average number of shares, basic 19,733 19,524 19,665
20,415 Dilutive effect of stock options and restricted stock - 107
56 89 --- --- --- --- Weighted average number of shares, diluted
19,733 19,631 19,721 20,504 ====== ====== ====== ====== MEDCATH
CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share
data) June 30, September 30, 2009 2008 ---- ---- (Unaudited)
Current assets: Cash and cash equivalents $42,857 $93,836
Restricted cash 3,166 3,154 Accounts receivable, net 76,205 83,875
Income tax receivable, net 3,940 3,091 Medical supplies 18,335
15,479 Deferred income tax assets 7,600 9,769 Prepaid expenses and
other current assets 12,235 9,796 Current assets of discontinued
operations 10,052 20,776 ------ ------ Total current assets 174,390
239,776 Property and equipment, net 370,418 323,729 Investments in
affiliates 13,261 15,285 Goodwill 60,174 60,174 Other intangible
assets, net 5,974 6,063 Other assets 13,167 8,378 Long-term assets
of discontinued operations - 51 --- --- Total assets $637,384
$653,456 ======== ======== Current liabilities: Accounts payable
$40,613 $41,642 Accrued compensation and benefits 17,980 16,872
Other accrued liabilities 25,793 24,054 Current portion of
long-term debt and obligations under capital leases 19,133 31,920
Current liabilities of discontinued operations 9,560 10,184 -----
------ Total current liabilities 113,079 124,672 Long-term debt
104,683 115,628 Obligations under capital leases 4,111 2,087
Deferred income tax liabilities 12,267 12,352 Other long-term
obligations 6,882 4,454 ----- ----- Total liabilities 241,022
259,193 Minority interest in equity of consolidated subsidiaries
18,737 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; 21,691,780 issued
and 19,737,419 outstanding at June 30, 2009; 21,553,054 issued and
19,598,693 outstanding at September 30, 2008 216 216 Paid-in
capital 455,346 455,494 Accumulated deficit (32,814) (41,138)
Accumulated other comprehensive loss (326) (179) Treasury stock, at
cost; 1,954,361 shares at June 30, 2009 1,954,361 shares at
September 30, 2008 (44,797) (44,797) ------- ------- Total
stockholders' equity 377,625 369,596 ------- ------- Total
liabilities and stockholders' equity $637,384 $653,456 ========
======== MEDCATH CORPORATION SELECTED OPERATING DATA (In thousands,
except per share data and selected operating data) (Unaudited)
Three Months Ended Nine Months Ended June 30, June 30, --------
-------- 2009 2008 % Change 2009 2008 % Change ---- ---- --------
---- ---- -------- Statement of Operations Data: Net revenue
$150,904 $154,273 (2.2)% $462,874 $455,168 1.7% Adjusted EBITDA (1)
$11,290 $22,747 (50.4)% $49,261 $66,568 (26.0)% Income from
operations $2,243 $13,178 (83.0)% $21,868 $37,125 (41.1)% Income
from continuing operations $586 $4,902 (88.0)% $4,388 $12,678
(65.4)% Earnings per share from continuing operations, basic $0.03
$0.25 (88.0)% $0.22 $0.62 (64.5)% Earnings per share from
continuing operations, diluted $0.03 $0.25 (88.0)% $0.22 $0.62
(64.5)% (1) See Supplemental Financial Disclosure--Reconciliation
of GAAP Financial Measures to Non-GAAP Financial Measures. Three
Months Ended Nine Months Ended June 30, June 30, -------- --------
2009 2008 % Change 2009 2008 % Change ---- ---- -------- ---- ----
-------- Selected Operating Data (a): Number of hospitals 7 7 7 7
Licensed beds ( c ) 588 449 588 449 Staffed and available beds ( d
) 542 449 542 449 Admissions ( e ) 6,352 7,384 (14.0)% 20,152
22,380 (10.0)% Adjusted admissions ( f ) 10,284 10,341 (0.6)%
30,714 30,979 (0.9)% Patient days ( g ) 25,482 27,132 (6.1)% 78,681
81,853 (3.9)% Adjusted patient days ( h ) 41,174 38,105 8.1%
120,106 113,790 5.6% Average length of stay (days) ( i ) 4.01 3.67
9.3% 3.90 3.66 6.6% Occupancy ( j ) 51.7% 66.4% 53.2% 66.5%
Inpatient catheterization procedures ( k ) 3,071 3,961 (22.5)%
10,069 12,244 (17.8)% Inpatient Surgical procedures ( l ) 2,045
2,260 (9.5)% 6,133 6,332 (3.1)% Hospital net revenue $141,665
$144,676 (2.1)% $436,457 $426,300 2.4% Combined Operating Data (b):
Number of hospitals 9 9 9 9 Licensed beds ( c ) 755 676 755 676
Staffed and available beds ( d ) 705 612 705 612 Admissions ( e )
9,187 9,879 (7.0)% 28,917 30,179 (4.2)% Adjusted admissions ( f )
14,979 14,512 3.2% 44,849 43,838 2.3% Patient days ( g ) 33,885
34,819 (2.7)% 105,350 106,614 (1.2)% Adjusted patient days ( h )
54,810 50,722 8.1% 162,387 153,697 5.7% Average length of stay
(days) ( i ) 3.69 3.52 4.8% 3.64 3.53 3.1% Occupancy ( j ) 52.8%
62.5% 54.7% 63.6% Inpatient catheterization procedures ( k ) 3,786
4,814 (21.4)% 12,427 14,624 (15.0)% Inpatient surgical procedures (
l ) 2,618 2,842 (7.9)% 7,951 8,287 (4.1)% Hospital net revenue
$182,058 $183,446 (0.8)% $558,548 $545,892 2.3% ( 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
consolidated financial statements for the three and nine months
ended June 30, 2009 and 2008. Three Months Nine Months Ended June
30, Ended June 30, -------------- ------------- 2009 2008 2009 2008
---- ---- ---- ---- (in thousands) (in thousands) Income from
continuing operations $586 $4,902 $4,388 $12,678 Add: Income tax
expense 536 3,469 2,998 8,917 Minority interest share of earnings
of consolidated subsidiaries 2,287 3,865 9,703 12,644 Equity in net
earnings of unconsolidated affiliates (2,265) (2,636) (7,044)
(6,842) Interest and other income (52) (284) (218) (1,930) Loss on
early extinguishment of debt - - 6,702 - Interest expense 1,151
3,862 5,339 11,658 (Gain) loss on disposal of property, equipment
and other assets (26) 225 138 391 Amortization 230 149 589 411
Depreciation 7,858 7,505 23,258 22,535 Pre-opening expenses 754 149
1,340 643 Share-based compensation expense 231 1,541 2,068 5,463
--- ----- ----- ----- Adjusted EBITDA $11,290 $22,747 $49,261
$66,568 ======= ======= ======= ======= The following table
reconciles adjusted diluted earnings per share from continuing
operations with MedCath's diluted earnings share from continuing
operations as derived directly from MedCath's consolidated
financial statements for the three months ended June 30, 2009.
Diluted earnings per share $0.03 Add: DSH adjustments 0.08 Medicaid
reimbursement charges 0.01 Professional fees for internal
assessment 0.03 Settlement of Medicare claims 0.03 Severance
expense 0.01 Share-based compensation expense 0.01 Pre-opening
expense 0.02 ---- Adjusted diluted earnings per share $0.22 =====
DATASOURCE: MedCath Corporation CONTACT: O. Edwin French,
President/Chief Executive Officer, +1-704-708-6600, or Art Parker,
Interim Chief Financial Officer, +1-704-708-6600 Web Site:
http://www.medcath.com/
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