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MedCath Corporation Reports Fourth Quarter Earnings, Enters New Credit Facility and Announces Redemption of 9 7/8% Senior Notes

November 14, 2008

CHARLOTTE, N.C., Nov. 13 /PRNewswire-FirstCall/ — MedCath Corporation , a healthcare provider focused on high acuity healthcare services, predominately the diagnosis and treatment of cardiovascular disease, today announced its operating results for its fourth fiscal quarter, which ended September 30, 2008.

In addition, MedCath announced the completion of the syndication of a new $160.0 million, three-year senior secured credit facility. The credit facility consists of a $75.0 million term loan and an $85.0 million revolver. Proceeds of the term loan will be used to repurchase all of MedCath’s outstanding 9.875% Senior Notes, while the revolver will replace MedCath’s existing revolver.

MedCath’s EPS from continuing operations equaled $0.02 in the fourth quarter of fiscal 2008. Strong cash flows during the fourth quarter of fiscal 2008 resulted in MedCath’s Adjusted Free Cash Flows equaling $0.41 per diluted share.

Fourth Quarter 2008 Results

MedCath’s reported net revenue increased 4.0% to $150.9 million in the fourth quarter of fiscal 2008 from $145.1 million in the fourth quarter of fiscal 2007. Income from operations decreased to $5.2 million from $14.4 million in the fourth quarter of fiscal 2007 and Adjusted EBITDA decreased to $12.5 million from $22.7 million in the same period of the prior year. MedCath’s income from continuing operations was $0.4 million, or $0.02 per diluted share, in the fourth quarter of fiscal 2008 compared to $2.5 million, or $0.11 per diluted share, in the fourth quarter of fiscal 2007.

MedCath’s Adjusted EBITDA for the fourth quarter of fiscal 2008 includes the following significant items related to the resolution of prior years’ activities:

— A $0.9 million decrease in Adjusted EBITDA related to settlement expense and legal cost of a non-patient dispute between MedCath Partners and a hospital that receives catheterization management services from a venture in which MedCath Partners is the majority owner; and

— A $1.4 million reduction in net revenue and Adjusted EBITDA related to prior period cost reports and prior period cost report valuation allowances, primarily related to Medicare.

In addition, MedCath’s Adjusted EBITDA for the fourth quarter of fiscal 2008 reflects the following significant items:

— A $3.0 million reduction in Adjusted EBITDA in comparison to the third quarter of 2008 at two hospitals that experienced a sequential decline in patient volumes;

— A $2.0 million reduction in Adjusted EBITDA due to an increase in reserves for doubtful accounts related to lower collection percentage of certain patient accounts, most notably in the collection of the self-pay portion of commercial insurance contracts and in the collections from patients applying, but not approved for, government assistance; and

— A $0.9 million reduction in Adjusted EBITDA due to an increase in accounts receivable allowance to reflect the expectation of lower reimbursement for commercial non-contract ER business at one of our hospitals.

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 provided a $0.5 million benefit in the fourth quarter of fiscal 2008, or $0.01 per diluted share, compared to a $0.5 million expense, or $0.01 per diluted share, in the fourth quarter of fiscal 2007. Pre-opening expenses totaled $0.1 million in the fourth quarter of fiscal 2008, compared to $0.6 million in the fourth quarter of fiscal 2007.

“During the fourth quarter we experienced an increase in drug-eluting stent and certain surgery volumes,” said Ed French, MedCath’s President and Chief Executive Officer. “Despite these improved volumes, we were challenged by higher operating expense, especially uncompensated care expense. As we look forward, we see continued near-term challenges from current economic uncertainties and their impact on surgeries that might be delayed and ultimate collections on procedures performed.”

Capitalized interest totaled $1.1 million in the fourth quarter primarily due to construction projects in Kingman, Arizona and St. Tammany Parish, Louisiana. There was a nominal amount of capitalized interest in the fourth quarter of fiscal 2007. MedCath’s annualized effective income tax rate increased to 42.5% at its fiscal year end from 39.0% at its fiscal third quarter of 2008.

Operating Statistics, Cash Flow and Capital Expenditures

Same facility hospital admissions in the fourth quarter of fiscal 2008 were 6,980, down 1.9% compared to the fourth quarter of fiscal 2007. Total admissions through the emergency department equaled 25.2% of admissions for the fourth quarter of fiscal 2008 in comparison to 26.2% in the fourth quarter of fiscal 2007.

Self-pay admissions equaled 2.5% of total admissions in the fourth quarter of fiscal 2008, in comparison to 2.4% of total admissions in the fourth quarter of fiscal 2007. Total uncompensated care, which includes charity care plus bad debt expense, equaled 10.4% of net revenue before the deduction for charity care in the fourth quarter of fiscal 2008 compared to 7.4% in the fourth quarter of fiscal 2007.

Same facility hospital outpatient visits totaled 7,542 in the fourth quarter of fiscal 2008, up 22.5% in comparison to the fourth quarter of fiscal 2007. Adjusted admissions of 9,976 were up 3.7% in the fourth quarter of fiscal 2008 in comparison to the fourth quarter of fiscal 2007.

Net cash provided by operating activities from continuing operations for the fourth quarter of fiscal 2008 was $13.6 million, down from $15.9 million for the fourth quarter of fiscal 2007. Cash capital expenditures, including $21.4 million in expenditures related to MedCath’s growth initiatives, totaled $29.5 million in the fourth quarter of fiscal 2008 in comparison to $17.8 million in the fourth quarter of fiscal 2007.

Bank Credit Facility

MedCath also announced today the completion of the syndication of a $160.0 million, three-year senior secured credit facility. The syndication was jointly led by Bank of America, N.A. as the administrative agent and Wachovia Bank, National Association, as the syndication agent.

The credit facility consists of a $75.0 million term loan and an $85.0 million revolver, and is secured with a lien on the assets of MedCath and its wholly owned subsidiaries. The credit facility is governed by customary financial and non-financial covenants and its interest rate is subject to a pricing grid based on MedCath’s total leverage ratio. The initial pricing is at MedCath’s option of either the London Interbank Offered Rate (LIBOR) plus 300 bps, or Bank of America’s base rate, as defined in the agreement, plus 200 bps.

MedCath will use the proceeds of the $75.0 million term loan, along with cash on hand, to repurchase all of the Company’s $102.0 million outstanding 9 7/8% senior notes, plus pay the notes’ repurchase premium of approximately $5.0 million. The $85.0 million revolver replaces MedCath’s current $100.0 million revolver and will be available to support general corporate purposes. In addition to the repurchase premium, MedCath will incur approximately $2.0 million in expense in its first quarter of fiscal 2009, ending December 31, 2008, related to the write-off of previously incurred financing cost.

“We are pleased to announce the consummation of our new credit facility and notification of our notes repurchase,” said Jeff Hinton, MedCath’s Chief Financial Officer. “The facility represents a significant increase in bank commitments despite unprecedented volatility in the credit markets. The facility allows MedCath to significantly reduce borrowing costs, fund previously announced growth capital requirements and selectively pursue hospital acquisitions or limited share repurchases.”

2009 Guidance

MedCath also announced today that due to its development activities and diversification strategy, which are expected to result in the opening of 150 inpatient beds over the next 12 months, it is eliminating the previous practice of providing annual financial guidance. The decision to end this practice is based on management’s belief that its actual performance and the successful execution of its long-term strategy are the best measures of the Company’s value.

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 and Adjusted Free Cash Flows. 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. Free Cash Flows is defined as cash flows from continuing operations less non-expansion capital expenditures. Management further adjusts the calculation of Free Cash Flows in arriving at Adjusted Free Cash Flows by adjusting Free Cash Flows to evenly disseminate interest payments paid twice a year. 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. Adjusted Free Cash Flow is utilized by management to measure the quality of MedCath’s earnings.

Management will discuss and answer questions regarding MedCath’s quarterly results Friday, November 14, 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 71798429. 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, November 21, 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 71798429. 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 fourth 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, 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  Twelve Months Ended                                         September 30,       September 30,                                        2008      2007      2008      2007      Net revenue                      $150,921  $145,084  $613,955  $660,603     Operating expenses:       Personnel expense                50,163    47,200   201,685   209,501       Medical supplies expense         44,010    38,768   170,801   176,615       Bad debt expense                 11,839     9,011    43,691    51,360       Other operating expenses         31,933    27,851   121,174   129,770       Pre-opening expenses                143       555       786       555       Depreciation                      7,670     6,748    30,261    31,236       Amortization                        149       126       560       631       (Gain) loss on disposal of        property, equipment and other        assets                            (143)      420       248     1,447         Total operating expenses      145,764   130,679   569,206   601,115     Income from operations              5,157    14,405    44,749    59,488     Other income (expenses):       Interest expense                 (2,642)   (3,916)  (14,300)  (22,068)       Loss on early extinguishment        of debt                            -        (223)      -      (9,931)       Interest and other income, net      100     1,568     2,043     7,843       Equity in net earnings of        unconsolidated affiliates        1,049    (2,922)    7,891     5,739         Total other expenses, net      (1,493)   (5,493)   (4,366)  (18,417)     Income from continuing      operations before minority      interest and income taxes          3,664     8,912    40,383    41,071     Minority interest share of      earnings of consolidated      subsidiaries                      (1,617)   (4,437)  (15,476)  (13,917)     Income from continuing      operations before income taxes     2,047     4,475    24,907    27,154     Income tax expense                  1,670     2,022    10,587    11,903     Income from continuing      operations                           377     2,453    14,320    15,251     Income (loss) from discontinued      operations, net of taxes             344    (1,545)    6,922    (3,724)     Net income                           $721      $908   $21,242   $11,527      Earnings (loss) per share, basic        Continuing operations            $0.02     $0.11     $0.71     $0.73        Discontinued operations           0.02     (0.07)     0.35     (0.17)        Earnings (loss) per share,         basic                           $0.04     $0.04     $1.06     $0.56      Earnings (loss) per share,      diluted        Continuing operations            $0.02     $0.11     $0.71     $0.71        Discontinued operations           0.02     (0.07)     0.35     (0.17)        Earnings (loss) per share,         diluted                         $0.04     $0.04     $1.06     $0.54      Weighted average number of      shares, basic                     19,590    21,202    19,996    20,872     Dilutive effect of stock options      and restricted stock                  65       579        73       639     Weighted average number of      shares, diluted                   19,655    21,781    20,069    21,511                                    MEDCATH CORPORATION                             CONSOLIDATED BALANCE SHEETS                          (In thousands, except share data)                                             September 30,     September 30,                                                 2008              2007                                             (Unaudited)           Current assets:            Cash and cash equivalents             $94,174          $140,276            Restricted cash                         3,154               -            Accounts receivable, net               84,791            85,943            Income tax receivable                   3,637               -            Medical supplies                       16,070            13,928            Deferred income tax assets              7,300            12,389            Prepaid expenses and other             current assets                         9,893             6,197            Current assets of             discontinued operations               19,856            22,832                 Total current assets             238,875           281,565          Property and equipment, net             323,780           270,663          Investments in affiliates                15,285             5,718          Goodwill                                 60,049            62,740          Other intangible assets, net              6,063             6,448          Other assets                              8,379             6,531          Long-term assets of           discontinued operations                    -              44,902                 Total assets                    $652,431          $678,567           Current liabilities:            Accounts payable                      $41,739           $30,933            Income tax payable                        -              10,552            Accrued compensation and             benefits                              16,885            18,567            Other accrued liabilities              23,663            13,421            Current portion of long-term             debt and obligations               under capital leases                31,920             4,089            Current liabilities of             discontinued operations               10,422            24,962                 Total current liabilities        124,629           102,524          Long-term debt                          115,628           146,398          Obligations under capital           leases                                   2,087             1,793          Deferred income tax           liabilities                             10,339            12,018          Other long-term obligations               3,691               460          Long-term liabilities of           discontinued components                    -                  13                 Total liabilities                256,374           263,206           Minority interest in equity of           consolidated subsidiaries               24,543            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; 21,553,054 issued             and 19,598,693 outstanding at             September 30, 2008;             21,271,144 issued and             21,202,244 outstanding at             September 30, 2007                       216               213            Paid-in capital                       457,160           447,688            Accumulated deficit                   (40,886)          (61,821)            Accumulated other             comprehensive loss                      (179)              (62)            Treasury stock, at cost;              68,900 shares at              September 30, 2007              1,954,361 shares at              September 30, 2008                  (44,797)             (394)                 Total stockholders' equity       371,514           385,624                 Total liabilities and                  stockholders' equity           $652,431          $678,567                                 MEDCATH CORPORATION                            SELECTED OPERATING DATA       (In thousands, except per share data and selected operating data)                                  (Unaudited)                                           Three Months Ended September 30,                                            2008        2007     % Change    Statement of Operations Data:   Net revenue                             $150,921    $145,084       4.0%   Adjusted EBITDA (1)                      $12,491     $22,743    (45.1)%   Income from operations                    $5,157     $14,405    (64.2)%   Income from continuing operations           $377      $2,453    (84.6)%   Earnings per share from continuing    operations, basic                         $0.02       $0.11    (81.8)%   Earnings per share from continuing    operations, diluted                       $0.02       $0.11    (81.8)%                                            Twelve Months Ended September 30,                                            2008        2007     % Change    Statement of Operations Data:   Net revenue                             $613,955    $660,603     (7.1)%   Adjusted EBITDA (1)                      $81,582     $97,672    (16.5)%   Income from operations                   $44,749     $59,488    (24.8)%   Income from continuing operations        $14,320     $15,251     (6.1)%   Earnings per share from continuing    operations, basic                         $0.71       $0.73     (2.7)%   Earnings per share from continuing    operations, diluted                       $0.71       $0.71        -     (1) See Supplemental Financial Disclosure--Reconciliation of GAAP       Financial Measures to Non-GAAP Financial Measures.                                              Three Months Ended September 30,                                           2008         2007      % Change    Selected Operating Data (a):   Number of hospitals                            7            7   Licensed beds ( c )                          509          421   Staffed and available beds ( d )             464          404   Admissions ( e )                           6,980        7,118     (1.9)%   Adjusted admissions ( f )                  9,976        9,622       3.7%   Patient days ( g )                        25,500       24,290       5.0%   Adjusted patient days ( h )               36,776       33,011      11.4%   Average length of stay (days) ( i )         3.65         3.41       7.0%   Occupancy ( j )                            59.7%        65.4%   Inpatient catheterization procedures    ( k )                                     3,735        3,904     (4.3)%   Inpatient surgical procedures ( l )        2,050        1,959       4.6%   Hospital net revenue                    $139,487     $133,215       4.7%    Selected Operating Data - Same    Facility (a):   Number of hospitals                            7            7   Licensed beds ( c )                          509          421   Staffed and available beds ( d )             464          404   Admissions ( e )                           6,980        7,118     (1.9)%   Adjusted admissions ( f )                  9,976        9,622       3.7%   Patient days ( g )                        25,500       24,290       5.0%   Adjusted patient days ( h )               36,776       33,011      11.4%   Average length of stay (days) ( i )         3.65         3.41       7.0%   Occupancy ( j )                            59.7%        65.4%   Inpatient catheterization procedures    ( k )                                     3,735        3,904     (4.3)%   Inpatient surgical procedures ( l )        2,050        1,959       4.6%   Hospital net revenue                    $139,487     $133,215       4.7%    Combined Operating Data (b):   Number of hospitals                            9            9   Licensed beds ( c )                          676          588   Staffed and available beds ( d )             629          567   Admissions ( e )                           9,997        9,779       2.2%   Adjusted admissions ( f )                 14,791       13,678       8.1%   Patient days ( g )                        34,732       32,748       6.1%   Adjusted patient days ( h )               51,281       45,697      12.2%   Average length of stay (days) ( i )         3.47         3.35       3.6%   Occupancy ( j )                            60.0%        62.8%   Inpatient catheterization procedures    ( k )                                     4,524        4,719     (4.1)%   Inpatient surgical procedures ( l )        2,666        2,645       0.8%   Hospital net revenue                    $179,296     $171,074       4.8%                                            Twelve Months Ended September 30,                                            2008        2007     % Change    Selected Operating Data (a):   Number of hospitals                            7           7   Licensed beds ( c )                          509         421   Staffed and available beds ( d )             464         404   Admissions ( e )                          29,360      35,373    (17.0)%   Adjusted admissions ( f )                 40,971      48,306    (15.2)%   Patient days ( g )                       107,353     120,556    (11.0)%   Adjusted patient days ( h )              150,559     164,131     (8.3)%   Average length of stay (days) ( i )         3.66        3.41       7.3%   Occupancy ( j )                            63.4%       81.8%   Inpatient catheterization procedures    ( k )                                    15,979      17,925    (10.9)%   Inpatient surgical procedures ( l )        8,383       9,481    (11.6)%   Hospital net revenue                    $565,787    $607,551     (6.9)%    Selected Operating Data - Same    Facility (a):   Number of hospitals                            7           7   Licensed beds ( c )                          509         421   Staffed and available beds ( d )             464         404   Admissions ( e )                          29,360      29,893     (1.8)%   Adjusted admissions ( f )                 40,971      39,375       4.1%   Patient days ( g )                       107,353     104,684       2.5%   Adjusted patient days ( h )              150,559     138,263       8.9%   Average length of stay (days) ( i )         3.66        3.50       4.6%   Occupancy ( j )                            63.4%       71.0%   Inpatient catheterization procedures    ( k )                                    15,979      17,299     (7.6)%   Inpatient surgical procedures ( l )        8,383       8,039       4.3%   Hospital net revenue                    $565,787    $546,539       3.5%    Combined Operating Data (b):   Number of hospitals                            9           9   Licensed beds ( c )                          676         588   Staffed and available beds ( d )             629         567   Admissions ( e )                          40,176      40,871     (1.7)%   Adjusted admissions ( f )                 58,669      55,585       5.5%   Patient days ( g )                       141,346     139,433       1.4%   Adjusted patient days ( h )              205,032     188,499       8.8%   Average length of stay (days) ( i )         3.52        3.41       3.2%   Occupancy ( j )                            61.6%       67.4%   Inpatient catheterization procedures    ( k )                                    19,148      20,557     (6.9)%   Inpatient surgical procedures ( l )       10,954      10,941       0.1%   Hospital net revenue                    $725,188    $695,530       4.3%     (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.  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 twelve months ended     September 30, 2008 and 2007.                                               Three Months      Twelve Months                                                Ended              Ended                                             September 30,      September 30,                                             2008     2007     2008     2007                                            (in thousands)    Income from continuing operations         $377   $2,453  $14,320  $15,251   Add:     Income tax expense                     1,670    2,022   10,587   11,903     Minority interest share of earnings      of consolidated subsidiaries          1,617    4,437   15,476   13,917     Equity in net earnings of      unconsolidated affiliates            (1,049)   2,922   (7,891)  (5,739)     Interest and other income, net          (100)  (1,568)  (2,043)  (7,843)     Loss on early extinguishment of debt     -        223      -      9,931     Interest expense                       2,642    3,916   14,300   22,068     (Gain) loss on disposal of property,      equipment and other assets             (143)     420      248    1,447     Amortization                             149      126      560      631     Depreciation                           7,670    6,748   30,261   31,236     Pre-opening expenses                     143      555      786      555     Share-based compensation expense        (485)     489    4,978    4,315   Adjusted EBITDA                        $12,491  $22,743  $81,582  $97,672       The following table presents MedCath's condensed statement of operations    data for the quarter and year ended September 30, 2007 on a pro forma    basis to reflect the reclassification of Harlingen Medical Center (HMC)    from a consolidated subsidiary to an equity method investment.                                           Three Months Ended September 30,                                              Adjustments to                                       2007   Deconsolidate  2007                                     (Actual)     HMC     (Pro Forma)  2008                                                  (in thousands)    Net Revenue                       $145,084     $-     $145,084   $150,921   Income from operations              14,405      -       14,405      5,157   Income from continuing operations    before minority interest     and income taxes                   8,912      -        8,912      3,664   Income from continuing operations    before income taxes                 4,475      -        4,475      2,047   Income from continuing operations    2,453      -        2,453        377   Net income (loss)                     $908     $-         $908       $721    Earnings (loss) per share, basic     $0.04     $-        $0.04      $0.04   Earnings (loss) per share, diluted   $0.04     $-        $0.04      $0.04    Weighted average number of shares,    basic                              21,202      -       21,202     19,590   Dilutive effect of stock options    and restricted stock                  579      -          579         65   Weighted average number of shares,    diluted                            21,781      -       21,781     19,655                                           Twelve Months Ended September 30,                                              Adjustments to                                       2007   Deconsolidate  2007                                     (Actual)     HMC     (Pro Forma)  2008                                                  (in thousands)    Net Revenue                        $660,603  $(61,012) $599,591  $613,955   Income from operations               59,488    (2,321)   57,167    44,749   Income from continuing operations    before minority interest     and income taxes                   41,071     1,191    42,262    40,383   Income from continuing operations    before income taxes                 27,154     1,191    28,345    24,907   Income from continuing operations    15,251     1,191    16,442    14,320   Net income (loss)                   $11,527    $1,191   $12,718   $21,242    Earnings (loss) per share, basic      $0.56     $0.06     $0.62     $1.06   Earnings (loss) per share, diluted    $0.54     $0.06     $0.60     $1.06    Weighted average number of shares,    basic                               20,872       -      20,872    19,996   Dilutive effect of stock options    and restricted stock                   639       -         639        73   Weighted average number of shares,    diluted                             21,511       -      21,511    20,069       The following table reflects the calculation of adjusted free cash flow    and adjusted free cash flow per diluted share. Free Cash Flows is    commonly defined as cash flows from continuing operations less capital    expenditures.  Management further adjusts the calculation of Free Cash    Flows in arriving at Adjusted Free Cash Flows by adjusting Free Cash    Flows to evenly disseminate interest payments paid twice a year.                                                              Three Months Ended                                                           September 30, 2008    Adjusted Free Cash Flow Per Share Calculation            (in thousands)     Cash flow from continuing operations                        $13,626    Adjustment for semi-annual coupon     payment                                                      2,517    Less: Non-expansion capital     expenditures                                                (8,022)    Adjusted free cash flow                                      $8,121     Diluted shares outstanding                                   19,655     Adjusted Free Cash Flow per diluted     share                                                        $0.41  

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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