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

Exhibit 99.2

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

	Three Months Ended December 31,
	2010			2009
Net revenue	$	88,900		$	87,830
Operating expenses:
Personnel expense		32,454			31,636
Medical supplies expense		19,222			22,107
Bad debt expense		9,709			7,506
Other operating expenses		24,116			22,344
Pre-opening expenses		—			866
Depreciation		4,887			5,938
Loss on disposal of property, equipment and other assets		93			96
Total operating expenses		90,481			90,493
Loss from operations		(1,581	)		(2,663	)
Other income (expenses):
Interest expense		(1,082	)		(945	)
Interest and other income, net		489			70
Gain on sale of unconsolidated investees		15,391			—
Equity in net earnings of unconsolidated affiliates		602			1,516
Total other income (expense), net		15,400			641
Income (loss) from continuing operations before income taxes		13,819			(2,022	)
Income tax expense (benefit)		4,482			(1,337	)
Income (loss) from continuing operations		9,337			(685	)
Income (loss) from discontinued operations, net of taxes		39,128			(1,130	)
Net income (loss) attributable to MedCath Corporation		48,465			(1,815	)
Less: Net income attributable to noncontrolling interest		(11,426	)		(841	)
Net income (loss) attributable to MedCath Corporation	$	37,039		$	(2,656	)
Amounts attributable to MedCath Corporation common stockholders:
Income (loss) from continuing operations, net of taxes	$	7,162			(1,902	)
Income (loss) from discontinued operations, net of taxes		29,877			(754	)
Net income (loss)	$	37,039		$	(2,656	)
Earnings (loss) per share, basic
Income (loss) from continuing operations attributable to MedCath Corporation common stockholders	$	0.36		$	(0.09	)
Income (loss) from discontinued operations attributable to MedCath Corporation common stockholders		1.50			(0.04	)
Income (loss) per share, basic	$	1.86		$	(0.13	)
Earnings (loss) per share, diluted
Income (loss) from continuing operations attributable to MedCath Corporation common stockholders	$	0.36		$	(0.09	)
Income (loss) from discontinued operations attributable to MedCath Corporation common stockholders		1.50			(0.04	)
Income (loss) per share, diluted	$	1.86		$	(0.13	)
Weighted average number of shares, basic		19,943			19,743
Dilutive effect of stock options and restricted stock		4			—
Weighted average number of shares, diluted		19,947			19,743

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

	December 31,			September 30,
	2010			2010
	(Unaudited)
Current assets:
Cash and cash equivalents	$	158,475		$	33,141
Accounts receivable, net		44,795			43,811
Income tax receivable		—			6,188
Medical supplies		10,644			10,550
Deferred income tax assets		7,815			13,247
Prepaid expenses and other current assets		12,902			13,453
Current assets of discontinued operations		57,345			47,920
Total current assets		291,976			168,310
Property and equipment, net		176,885			182,222
Other assets		11,652			24,716
Non-current assets of discontinued operations		1,232			119,290
Total assets	$	481,745		$	494,538
Current liabilities:
Accounts payable	$	19,957		$	15,716
Income tax payable		14,316			—
Accrued compensation and benefits		11,705			16,418
Other accrued liabilities		21,073			16,663
Current portion of long-term debt and obligations under capital leases		61,573			16,672
Current liabilities of discontinued operations		17,014			35,044
Total current liabilities		145,638			100,513
Long-term debt		—			52,500
Obligations under capital leases		5,822			6,500
Other long-term obligations		3,883			5,053
Long-term liabilities of discontinued operations		—			35,968
Total liabilities		155,343			200,534
Commitments and contingencies
Redeemable noncontrolling interest		5,812			11,534
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; 22,262,431 issued and 20,308,070 outstanding at December 31, 2010; 22,423,666 issued and 20,469,305 outstanding at September 30, 2010;		216			216
Paid-in capital		457,952			457,725
Accumulated deficit		(102,752	)		(139,791	)
Accumulated other comprehensive loss		—			(444	)
Treasury stock, at cost; 1,954,361 shares at December 31 2010 and September 30, 2010		(44,797	)		(44,797	)
Total MedCath Corporation stockholders’ equity		310,619			272,909
Noncontrolling interest		9,971			9,561
Total equity		320,590			282,470
Total liabilities and equity	$	481,745		$	494,538

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

	Three Months Ended December 31,
	2010			2009			%Change
Statement of Operations Data:
Net revenue	$	88,900		$	87,830			1.2	%
Adjusted EBITDA (1)	$	5,805		$	4,846			19.8	%
Loss from operations	$	(1,581	)	$	(2,663	)		40.6	%
Income (loss) from continuing operations, net of taxes	$	7,162		$	(1,902	)		476.6	%
Income (loss) per share from continuing operations, basic	$	0.36		$	(0.09	)		516.0	%
Income (loss) per share from continuing operations, diluted	$	0.36		$	(0.09	)		516.0	%

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

	Three Months Ended December 31,
	2010			2009			% Change
Selected Operating Data (a):
Number of hospitals		5			5
Licensed beds ( c )		421			421
Staffed and available beds ( d )		380			380
Admissions ( e )		4,438			4,482			(1.0	)%
Adjusted admissions ( f )		6,841			6,485			5.5	%
Patient days ( g )		16,254			16,672			(2.5	)%
Adjusted patient days ( h )		25,143			24,324			3.4	%
Average length of stay (days) ( i )		3.66			3.72			(1.6	)%
Occupancy ( j )		46.5	%		47.7	%
Inpatient catheterization procedures ( k )		1,792			1,964			(8.8	)%
Inpatient surgical procedures ( l )		1,032			1,085			(4.9	)%
Hospital net revenue	$	86,618		$	84,382			2.6	%
Combined Operating Data (b):
Number of hospitals		6			6
Licensed beds ( c )		533			533
Staffed and available beds ( d )		489			488
Admissions ( e )		6,256			6,199			0.9	%
Adjusted admissions ( f )		10,165			9,667			5.2	%
Patient days ( g )		21,729			21,827			(0.4	)%
Adjusted patient days ( h )		35,152			33,877			3.8	%
Average length of stay (days) ( i )		3.47			3.52			(1.4	)%
Occupancy ( j )		48.3	%		48.6	%
Inpatient catheterization procedures ( k )		1,972			2,162			(8.8	)%
Inpatient surgical procedures ( l )		1,451			1,445			0.4	%
Hospital net revenue	$	112,719		$	108,647			3.7	%

(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. However, Heart Hospital of South Dakota is excluded from prior year information since the Company disposed of its interest on October 1, 2010.
(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 income (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 months ended December 31, 2010 and 2009.

	Three Months Ended December 31,
	2010			2009
	(in thousands)
Income (loss) from continuing operations, net of taxes attributable to MedCath Corporation common stockholders	$	7,162		$	(1,902	)
Add:
Income tax expense (benefit)		4,482			(1,337	)
Net income attributable to noncontrolling interest		2,174			1,218
Equity in net earnings of unconsolidated affiliates		(602	)		(1,516	)
Interest and other income, net		(489	)		(70	)
Gain on sale of unconsolidated investees		(15,391	)		—
Interest expense		1,082			945
Loss on disposal of property, equipment and other assets		93			96
Depreciation		4,887			5,938
Pre-opening expenses		—			866
Share-based compensation expense		1,932			608
Professional fees for strategic options process		2,562			—
Sales tax refunds, net		(2,087	)		—
Adjusted EBITDA	$	5,805		$	4,846

The following table reconciles MedCath Corporation’s diluted income (loss) per share from continuing operations, net of taxes attributable to MedCath Corporation’s common stockholders as derived directly from MedCath’s consolidated financial statements to Adjusted diluted earnings per share from continuing operations for the three months ended December 31, 2010 and 2009.

	Three Months Ended December 31,
	2010			2009
Diluted income (loss) per share	$	0.36		$	(0.09	)
Add:
Gain on sale of unconsolidated investees		(0.47	)		—
Professional fees for strategic plans		0.08			—
Sales tax refunds		(0.05	)		—
Share-based compensation expense		0.06			0.02
Pre-opening expense		—			0.02
Adjusted diluted earnings per share	$	(0.02	)	$	(0.05	)