Medcath (MDTH) 8-K Medcath Corporation Reports Third Quarter Earnings

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,
	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)		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 June 30,							Nine Months Ended 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 June 30,									Nine Months Ended 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 Ended June 30,						Nine Months 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 EPS with MedCath’s diluted earnings per 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 control 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