MedCath Corporation News
MedCath Corporation Reports Second Quarter Earnings
Second Quarter 2008 Results
On
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
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
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
MedCath's operating results for the quarter ended
"Our quarterly results affirm our strategic direction to increase our bed capacity and asset base to diversify our service lines and revenue," said
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
Capital expenditures, including
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
MedCath Corporation, headquartered in
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
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
SOURCE MedCath Corporation
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