MEDCATH CORP - FORM 8-K - EX-99.2

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8-K - FORM 8-K - MEDCATH CORP	g24256e8vk.htm
EX-99.1 - EX-99.1 - MEDCATH CORP	g24256exv99w1.htm

Exhibit 99.2

MEDCATH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)


	Three Months Ended June 30,						Nine Months Ended June 30,
	2010			2009			2010			2009
Net revenue	$	131,847		$	124,588		$	390,815		$	381,410
Operating expenses:
Personnel expense		44,546			43,854			136,055			131,884
Medical supplies expense		35,706			36,472			107,453			105,829
Bad debt expense		13,642			10,406			36,241			28,798
Other operating expenses		29,935			26,537			89,292			81,039
Pre-opening expenses		—			754			866			1,340
Depreciation		7,636			6,466			23,054			19,179
Amortization		8			8			24			24
Impairment of property and equipment		22,813			—			42,761			—
Loss (gain) on disposal of property, equipment and other assets		20			(54	)		39			127

Total operating expenses		154,306			124,443			435,785			368,220

(Loss) Income from operations		(22,459	)		145			(44,970	)		13,190
Other income (expenses):
Interest expense		(1,131	)		(396	)		(3,337	)		(3,074	)
Loss on early extinguishment of debt		—			—			—			(6,702	)
Interest and other income		62			48			156			220
Loss on note receivable		—			—			(1,507	)		—
Equity in net earnings of unconsolidated affiliates		2,262			2,265			6,870			7,044

Total other income (expense), net		1,193			1,917			2,182			(2,512	)

(Loss) income from continuing operations before income taxes		(21,266	)		2,062			(42,788	)		10,678
Income tax (benefit) expense		(8,642	)		171			(17,929	)		1,287

Income (loss) from continuing operations		(12,624	)		1,891			(24,859	)		9,391
Income from discontinued operations, net of taxes		2,163			878			3,895			8,793

Net (loss) income		(10,461	)		2,769			(20,964	)		18,184
Less: Net income attributable to noncontrolling interest		(2,355	)		(2,273	)		(5,718	)		(9,860	)

Net (loss) income attributable to MedCath Corporation	$	(12,816	)	$	496		$	(26,682	)	$	8,324


Amounts attributable to MedCath Corporation common stockholders:
(Loss) income from continuing operations, net of taxes	$	(14,155	)	$	23		$	(29,246	)	$	1,708
Income from discontinued operations, net of taxes		1,339			473			2,564			6,616

Net (loss) income	$	(12,816	)	$	496		$	(26,682	)	$	8,324


(Loss) earnings per share, basic
(Loss) income from continuing operations attributable to MedCath Corporation common stockholders	$	(0.71	)	$	—		$	(1.48	)	$	0.09
Income from discontinued operations attributable to MedCath Corporation common stockholders		0.07			0.03			0.13			0.33

(Loss) earnings per share, basic	$	(0.64	)	$	0.03		$	(1.35	)	$	0.42


(Loss) earnings per share, diluted
(Loss) income from continuing operations attributable to MedCath Corporation common stockholders	$	(0.71	)	$	—		$	(1.48	)	$	0.09
Income from discontinued operations attributable to MedCath Corporation common stockholders		0.07			0.03			0.13			0.33

(Loss) earnings per share, diluted	$	(0.64	)	$	0.03		$	(1.35	)	$	0.42


Weighted average number of shares, basic		19,897			19,733			19,823			19,665
Dilutive effect of stock options and restricted stock		—			—			—			56

Weighted average number of shares, diluted		19,897			19,733			19,823			19,721

MEDCATH CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)


	June 30,			September 30,
	2010			2009
	(Unaudited)
Current assets:
Cash and cash equivalents	$	27,396		$	31,883
Accounts receivable, net		61,230			58,913
Income tax receivable		1,192			—
Medical supplies		15,888			15,459
Deferred income tax assets		12,272			12,161
Prepaid expenses and other current assets		13,711			13,471
Current assets of discontinued operations		26,172			44,978

Total current assets		157,861			176,865
Property and equipment, net		289,861			341,394
Investments in affiliates		10,301			14,055
Other assets		7,460			10,785
Deferred income tax assets		603			—
Non-current assets of discontinued operations		46,741			47,349

Total assets	$	512,827		$	590,448


Current liabilities:
Accounts payable	$	27,559		$	35,920
Income tax payable		—			297
Accrued compensation and benefits		17,148			16,118
Other accrued liabilities		20,647			23,277
Current portion of long-term debt and obligations under capital leases		15,808			21,187
Current liabilities of discontinued operations		19,062			19,832

Total current liabilities		100,224			116,631
Long-term debt		56,250			66,563
Obligations under capital leases		7,459			4,596
Deferred income tax liabilities		—			13,874
Other long-term obligations		5,262			8,533
Long-term liabilities of discontinued operations		35,872			35,721

Total liabilities		205,067			245,918

Commitments and contingencies

Redeemable noncontrolling interest		6,095			7,448

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; 22,446,727 issued and 20,492,366 outstanding at June 30, 2010; 22,104,917 issued and 20,150,556 outstanding at September 30, 2009		216			216
Paid-in capital		457,058			455,259
Accumulated deficit		(118,102	)		(91,420	)
Accumulated other comprehensive loss		(395	)		(360	)
Treasury stock, at cost; 1,954,361 shares at March 31, 2010 1,954,361 shares at September 30, 2009		(44,797	)		(44,797	)

Total MedCath Corporation stockholders’ equity		293,980			318,898
Noncontrolling interest		7,685			18,184

Total equity		301,665			337,082

Total liabilities and equity	$	512,827		$	590,448

MEDCATH CORPORATION
SELECTED OPERATING DATA
(In thousands, except per share data and selected operating data)
(Unaudited)


	Three Months Ended June 30,								Nine Months Ended June 30,
	2010			2009		% Change			2010			2009		% Change
Statement of Operations Data:
Net revenue	$	131,847		$	124,588		5.8	%	$	390,815		$	381,410		2.5	%
Adjusted EBITDA (1)	$	10,238		$	12,920		(20.8	)%	$	25,820		$	41,298		(37.5	)%
(Loss) Income from operations	$	(22,459	)	$	145		(15589.0	)%	$	(44,970	)	$	13,190		(440.9	)%
(Loss) income from continuing operations, net of taxes	$	(14,155	)	$	23		(61643.5	)%	$	(29,246	)	$	1,708		(1812.3	)%
(Loss) income per share from continuing operations, basic	$	(0.71	)	$	—		(100.0	)%	$	(1.48	)	$	0.09		(1744.4	)%
(Loss) income per share from continuing operations, diluted	$	(0.71	)	$	—		(100.0	)%	$	(1.48	)	$	0.09		(1744.4	)%


(1)		See Supplemental Financial Disclosure-Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures.


	Three Months Ended June 30,															Nine Months Ended June 30,
										2010															2010
	2010			2009			% Change			Same Facility			% Change			2010			2009			% Change			Same Facility			% Change
Selected Operating Data (a):
Number of hospitals		7			6						6						7			6						6
Licensed beds ( c )		600			530						530						600			530						530
Staffed and available beds ( d )		514			484						444						514			484						444
Admissions ( e )		6,526			5,653			15.4	%		6,042			6.9	%		19,347			17,883			8.2	%		18,176			1.6	%
Adjusted admissions ( f )		9,741			8,594			13.3	%		8,837			2.8	%		28,436			25,621			11.0	%		26,252			2.5	%
Patient days ( g )		24,276			22,795			6.5	%		22,582			(0.9	)%		72,536			69,841			3.9	%		68,073			(2.5	)%
Adjusted patient days ( h )		36,474			34,803			4.8	%		33,284			(4.4	)%		107,012			100,167			6.8	%		98,809			(1.4	)%
Average length of stay (days) ( i )		3.72			4.03			(7.7	)%		3.74			(7.2	)%		3.75			3.91			(4.1	)%		3.75			(4.1	)%
Occupancy ( j )		51.9	%		51.8	%					55.9	%					51.7	%		52.9	%					56.2	%
Inpatient catheterization procedures ( k )		2,971			2,735			8.6	%		2,903			6.1	%		8,824			8,993			(1.9	)%		8,624			(4.1	)%
Inpatient surgical procedures ( l )		1,865			1,809			3.1	%		1,769			(2.2	)%		5,463			5,394			1.3	%		5,237			(2.9	)%
Hospital net revenue	$	127,613		$	118,104			8.1	%	$	120,148			1.7	%	$	377,402		$	363,790			3.7	%	$	358,086			(1.6	)%

Combined Operating Data (b):
Number of hospitals		9			8						8						9			8						8
Licensed beds ( c )		767			697						697						767			697						697
Staffed and available beds ( d )		678			647						608						678			647						608
Admissions ( e )		9,079			8,521			6.5	%		8,595			0.9	%		27,143			26,683			1.7	%		25,972			(2.7	)%
Adjusted admissions ( f )		13,993			13,288			5.3	%		13,089			(1.5	)%		41,528			39,751			4.5	%		39,344			(1.0	)%
Patient days ( g )		32,365			31,192			3.8	%		30,671			(1.7	)%		97,344			96,503			0.9	%		92,881			(3.8	)%
Adjusted patient days ( h )		49,970			48,428			3.2	%		46,780			(3.4	)%		148,184			142,436			4.0	%		139,981			(1.7	)%
Average length of stay (days) ( i )		3.56			3.66			(2.7	)%		3.57			(2.5	)%		3.59			3.62			(0.8	)%		3.58			(1.1	)%
Occupancy ( j )		52.5	%		53.0	%					55.4	%					52.6	%		54.6	%					56.0	%
Inpatient catheterization procedures ( k )		3,663			3,450			6.2	%		3,595			4.2	%		10,928			11,347			(3.7	)%		10,728			(5.5	)%
Inpatient surgical procedures ( l )		2,480			2,381			4.2	%		2,384			0.1	%		7,177			7,211			(0.5	)%		6,951			(3.6	)%
Hospital net revenue	$	170,658		$	158,497			7.7	%	$	163,193			3.0	%	$	502,693		$	485,882			3.5	%	$	483,377			(0.5	)%


(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 the three and nine months ended June 30, 2010 exclude the results of Hualapai Mountain 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 the loss from continuing operations, net of taxes attributable to MedCath Corporation’s common stockholders as derived directly from MedCath Corporation’s consolidated financial statements to Adjusted EBITDA for the three and nine months ended June 30, 2010 and 2009.


	Three Months Ended June 30,						Nine Months Ended June 30,
	2010			2009			2010			2009
	(in thousands)						(in thousands)
(Loss) income from continuing operations, net of taxes	$	(14,155	)	$	23		$	(29,246	)	$	1,708
Add:
Income tax (benefit) expense		(8,642	)		171			(17,929	)		1,287
Net income attributable to noncontrolling interest		1,531			1,868			4,387			7,683
Equity in net earnings of unconsolidated affiliates		(2,262	)		(2,265	)		(6,870	)		(7,044	)
Interest and other income		(62	)		(48	)		(156	)		(220	)
Loss on note receivable		—			—			1,507			—
Loss on early extinguishment of debt		—			—			—			6,702
Interest expense		1,131			396			3,337			3,074
Loss (gain) on disposal of property, equipment and other assets		20			(54	)		39			127
Impairment of property and equipment		22,813			—			42,761			—
Amortization		8			8			24			24
Depreciation		7,636			6,466			23,054			19,179
Pre-opening expenses		—			754			866			1,340
Share-based compensation expense		553			231			2,379			2,068
Professional fees for strategic plans		1,667			—			1,667			—
DSH and Medicaid adjustments		—			3,064			—			3,064
Professional fees for internal assessment		—			1,106			—			1,106
Settlement of Medicare claims		—			840			—			840
Severance expense		—			360			—			360

Adjusted EBITDA	$	10,238		$	12,920		$	25,820		$	41,298

The following table reconciles MedCath Corporation’s diluted (loss) earnings per share from continuing operations, net of taxes attributable to MedCath Corporations common stockholders as derived directly from MedCath’s consolidated financial statements to Adjusted diluted (loss) earnings per share from continuing operations for the three and nine months ended June 30, 2010 and 2009.


	Three Months Ended June 30,					Nine Months Ended June 30,
	2010			2009		2010			2009
Diluted (loss) earnings per share	$	(0.71	)	$	—	$	(1.48	)	$	0.09
Add:
Impairment of property and equipment		0.69			—		1.23			—
Loss on note receivable		—			—		0.05			—
DSH and Medicaid adjustments		—			0.09		—			0.09
Professional fees for internal assessment		—			0.03		—			0.03
Professional fees for strategic plans		0.05			—		0.05			—
Settlement of Medicare claims		—			0.03		—			0.03
Severance expense		—			0.01		—			0.01
Loss on early extinguishment of debt		—			—		—			0.22
Share-based compensation expense		0.02			0.01		0.08			0.07
Pre-opening expense		—			0.02		0.02			0.04

Adjusted diluted earnings (loss) per share	$	0.05		$	0.19	$	(0.05	)	$	0.58

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