Medcath (MDTH) 8-K Medcath Corporation Reports Second Quarter Fiscal 2010 Earnings

Exhibit 99.2

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

	Three Months Ended March 31,						Six Months Ended March 31,
	2010			2009			2010			2009
Net revenue	$	134,909		$	130,767		$	258,967		$	256,822
Operating expenses:
Personnel expense		46,444			44,662			91,508			88,029
Medical supplies expense		36,849			35,120			71,747			69,357
Bad debt expense		11,918			8,798			22,599			18,392
Other operating expenses		29,743			27,342			59,355			54,502
Pre-opening expenses		—			380			866			587
Depreciation		7,768			6,217			15,418			12,713
Amortization		8			8			16			16
Impairment of property and equipment		19,462			—			19,462			—
(Gain) loss on disposal of property, equipment and other assets		(76	)		108			19			181
Total operating expenses		152,116			122,635			280,990			243,777
(Loss) income from operations		(17,207	)		8,132			(22,023	)		13,045
Other income (expenses):
Interest expense		(1,149	)		(581	)		(2,207	)		(2,678	)
Loss on early extinguishment of debt		—			259			—			(6,702	)
Interest and other income		23			73			93			172
Loss on note receivable		(1,507	)		—			(1,507	)		—
Equity in net earnings of unconsolidated affiliates		3,206			2,714			4,722			4,779
Total other income (expense), net		573			2,465			1,101			(4,429	)
(Loss) income from continuing operations before income taxes		(16,634	)		10,597			(20,922	)		8,616
Income tax (benefit) expense		(7,155	)		2,610			(9,057	)		1,115
(Loss) income from continuing operations		(9,479	)		7,987			(11,865	)		7,501
Income from discontinued operations, net of taxes		1,163			2,060			1,733			7,915
Net (loss) income		(8,316	)		10,047			(10,132	)		15,416
Less: Net income attributable to noncontrolling interest		(2,524	)		(4,465	)		(3,364	)		(7,588	)
Net (loss) income attributable to MedCath Corporation	$	(10,840	)	$	5,582		$	(13,496	)	$	7,828
Amounts attributable to MedCath Corporation common stockholders:
(Loss) income from continuing operations, net of taxes	$	(11,630	)	$	4,220		$	(14,721	)	$	1,685
Income from discontinued operations, net of taxes		790			1,362			1,225			6,143
Net (loss) income	$	(10,840	)	$	5,582		$	(13,496	)	$	7,828
(Loss) earnings per share, basic
(Loss) income from continuing operations attributable to MedCath Corporation common stockholders	$	(0.59	)	$	0.21		$	(0.74	)	$	0.09
Income from discontinued operations attributable to MedCath Corporation common stockholders		0.04			0.07			0.06			0.31
(Loss) earnings per share, basic	$	(0.55	)	$	0.28		$	(0.68	)	$	0.40
(Loss) earnings per share, diluted
(Loss) income from continuing operations attributable to MedCath Corporation common stockholders	$	(0.59	)	$	0.21		$	(0.74	)	$	0.09
Income from discontinued operations attributable to MedCath Corporation common stockholders		0.04			0.07			0.06			0.31
(Loss) earnings per share, diluted	$	(0.55	)	$	0.28		$	(0.68	)	$	0.40
Weighted average number of shares, basic		19,829			19,664			19,786			19,631
Dilutive effect of stock options and restricted stock		—			26			—			—
Weighted average number of shares, diluted		19,829			19,690			19,786			19,631

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

	March 31,			September 30,
	2010			2009
	(Unaudited)
Current assets:
Cash and cash equivalents	$	26,113		$	31,883
Accounts receivable, net		64,375			58,913
Income tax receivable		699			—
Medical supplies		15,779			15,459
Deferred income tax assets		11,783			12,161
Prepaid expenses and other current assets		15,016			13,471
Current assets of discontinued operations		25,071			44,978
Total current assets		158,836			176,865
Property and equipment, net		320,966			341,394
Investments in affiliates		9,773			14,055
Other assets		7,449			10,785
Non-current assets of discontinued operations		46,762			47,349
Total assets	$	543,786		$	590,448
Current liabilities:
Accounts payable	$	36,221		$	35,920
Income tax payable		—			297
Accrued compensation and benefits		18,505			16,118
Other accrued liabilities		17,253			23,277
Current portion of long-term debt and obligations under capital leases		18,081			21,187
Current liabilities of discontinued operations		17,498			19,832
Total current liabilities		107,558			116,631
Long-term debt		60,000			66,563
Obligations under capital leases		8,527			4,596
Deferred income tax liabilities		6,469			13,874
Other long-term obligations		5,660			8,533
Long-term liabilities of discontinued operations		36,020			35,721
Total liabilities		224,234			245,918
Commitments and contingencies
Redeemable noncontrolling interest		5,162			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; 22,477,039 issued and 20,522,678 outstanding at March 31, 2010; 22,104,917 issued and 20,150,556 outstanding at September 30, 2009		216			216
Paid-in capital		456,523			455,259
Accumulated deficit		(104,916	)		(91,420	)
Accumulated other comprehensive loss		(328	)		(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		306,698			318,898
Noncontrolling interest		7,692			18,184
Total equity		314,390			337,082
Total liabilities and equity	$	543,786		$	590,448

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

	Three Months Ended March 31,								Six Months Ended March 31,
	2010			2009		% Change			2010			2009		% Change
Statement of Operations Data:
Net revenue	$	134,909		$	130,767		3.2	%	$	258,967		$	256,822		0.8	%
Adjusted EBITDA (1)	$	11,172		$	15,684		(28.8	)%	$	15,584		$	28,379		(45.1	)%
(Loss) income from operations	$	(17,207	)	$	8,132		(311.6	)%	$	(22,023	)	$	13,045		(268.8	)%
(Loss) income from continuing operations, net of taxes	$	(11,630	)	$	4,220		(375.6	)%	$	(14,721	)	$	1,685		(973.6	)%
(Loss) income per share from continuing operations, basic	$	(0.59	)	$	0.21		(381.0	)%	$	(0.74	)	$	0.09		(922.2	)%
(Loss) income per share from continuing operations, diluted	$	(0.59	)	$	0.21		(381.0	)%	$	(0.74	)	$	0.09		(922.2	)%

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

	Three Months Ended March 31,															Six Months Ended March 31,
										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			451						530						600			451						530
Staffed and available beds ( d )		514			404						444						514			404						444
Admissions ( e )		6,650			6,199			7.3	%		6,191			(0.1	)%		12,813			12,230			4.8	%		12,127			(0.8	)%
Adjusted admissions ( f )		9,884			8,812			12.2	%		9,058			2.8	%		18,685			16,983			10.0	%		17,405			2.5	%
Patient days ( g )		25,368			24,810			2.2	%		23,531			(5.2	)%		48,252			47,039			2.6	%		45,488			(3.3	)%
Adjusted patient days ( h )		37,156			34,941			6.3	%		33,940			(2.9	)%		70,521			65,452			7.7	%		65,518			0.1	%
Average length of stay (days) ( i )		3.81			4.00			(4.8	)%		3.80			(5.0	)%		3.77			3.85			(2.1	)%		3.75			(2.6	)%
Occupancy ( j )		54.8	%		68.2	%					58.9	%					51.6	%		64.0	%					56.3	%
Inpatient catheterization procedures ( k )		3,028			3,077			(1.6	)%		2,940			(4.5	)%		5,845			6,229			(6.2	)%		5,714			(8.3	)%
Inpatient surgical procedures ( l )		1,876			1,842			1.8	%		1,786			(3.0	)%		3,598			3,576			0.6	%		3,468			(3.0	)%
Hospital net revenue	$	130,645		$	125,652			4.0	%	$	123,386			(1.8	)%	$	249,789		$	245,687			1.7	%	$	237,938			(3.2	)%
Combined Operating Data (b):
Number of hospitals		9			8						8						9			8						8
Licensed beds ( c )		767			618						697						767			618						697
Staffed and available beds ( d )		677			567						607						677			567						607
Admissions ( e )		9,410			9,125			3.1	%		8,951			(1.9	)%		18,055			18,162			(0.6	)%		17,369			(4.4	)%
Adjusted admissions ( f )		14,591			13,507			8.0	%		13,765			1.9	%		27,520			26,424			4.1	%		26,240			(0.7	)%
Patient days ( g )		34,276			34,070			0.6	%		32,439			(4.8	)%		64,976			65,304			(0.5	)%		62,212			(4.7	)%
Adjusted patient days ( h )		51,958			49,470			5.0	%		48,742			(1.5	)%		98,192			94,091			4.4	%		93,190			(1.0	)%
Average length of stay (days) ( i )		3.64			3.73			(2.4	)%		3.62			(2.9	)%		3.60			3.60			0.0	%		3.58			(0.6	)%
Occupancy ( j )		56.3	%		66.8	%					59.4	%					52.7	%		63.3	%					56.3	%
Inpatient catheterization procedures ( k )		3,748			3,883			(3.5	)%		3,660			(5.7	)%		7,256			7,868			(7.8	)%		7,125			(9.4	)%
Inpatient surgical procedures ( l )		2,435			2,475			(1.6	)%		2,345			(5.3	)%		4,698			4,821			(2.6	)%		4,568			(5.2	)%
Hospital net revenue	$	172,897		$	166,552			3.8	%	$	165,638			(0.5	)%	$	332,035		$	327,386			1.4	%	$	320,184			(2.2	)%

(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 excludes 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 six months ended March 31, 2010 and 2009.

	Three Months Ended March 31,						Six Months Ended March 31,
	2010			2009			2010			2009
	(in thousands)						(in thousands)
(Loss) income from continuing operations, net of taxes	$	(11,630	)	$	4,220		$	(14,721	)	$	1,685
Add:
Income tax (benefit) expense		(7,155	)		2,610			(9,057	)		1,115
Net income attributable to noncontrolling interest		2,151			3,767			2,856			5,816
Equity in net earnings of unconsolidated affiliates		(3,206	)		(2,714	)		(4,722	)		(4,779	)
Interest and other income		(23	)		(73	)		(93	)		(172	)
Loss on note receivable		1,507			—			1,507			—
Loss on early extinguishment of debt		—			(259	)		—			6,702
Interest expense		1,149			581			2,207			2,678
(Gain) loss on disposal of property, equipment and other assets		(76	)		108			19			181
Impairment of property and equipment		19,462			—			19,462			—
Amortization		8			8			16			16
Depreciation		7,768			6,217			15,418			12,713
Pre-opening expenses		—			380			866			587
Share-based compensation expense		1,217			839			1,826			1,837
Adjusted EBITDA	$	11,172		$	15,684		$	15,584		$	28,379

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 six months ended March 31, 2010 and 2009.

	Three Months Ended March 31,					Six Months Ended March 31,
	2010			2009		2010			2009
Diluted (loss) earnings per share	$	(0.59	)	$	0.21	$	(0.74	)	$	0.09
Add:
Loss on early extinguishment of debt		—			—		—			0.22
Impairment of property and equipment		0.60			—		0.60			—
Loss on note receivable		0.05			—		0.05			—
Share-based compensation expense		0.04			0.03		0.06			0.04
Pre-opening expenses		—			0.01		0.02			0.02
Adjusted diluted earnings (loss) per share	$	0.10		$	0.25	$	(0.01	)	$	0.37