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

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

			Three Months Ended March 31,						Six Months Ended March 31,
			2004			2003			2004			2003
Net revenue			$	173,286		$	135,187		$	329,912		$	256,288
Operating expenses:
	Personnel expense			54,586			43,402			103,439			83,152
	Medical supplies expense			46,979			32,616			89,596			60,564
	Bad debt expense			9,640			4,903			23,499			10,137
	Other operating expenses			38,566			33,601			71,521			62,823
	Pre-opening expenses			2,087			2,789			5,531			5,195
	Depreciation			11,008			9,870			21,451			19,387
	Amortization			290			437			580			874
	Loss (gain) on disposal of property, equipment and other assets			36			18			(48	)		88
		Total operating expenses		163,192			127,636			315,569			242,220
Income from operations				10,094			7,551			14,343			14,068
Other income (expenses):
	Interest expense			(7,198	)		(6,242	)		(13,787	)		(12,448	)
	Interest income			161			339			394			791
	Other income, net			2			80			6			103
	Equity in net earnings of unconsolidated affiliates			1,147			1,064			1,724			1,818
		Total other expenses, net		(5,888	)		(4,759	)		(11,663	)		(9,736	)
Income before minority interest and income taxes				4,206			2,792			2,680			4,332
Minority interest share of (earnings) losses of consolidated subsidiaries				65			(1,811	)		31			(2,702	)
Income before income taxes				4,271			981			2,711			1,630
Income tax expense				(1,630	)		(393	)		(1,003	)		(652	)
Net income			$	2,641		$	588		$	1,708		$	978
Earnings per share, basic:			$	0.15		$	0.03		$	0.10		$	0.05
Earnings per share, diluted:			$	0.14		$	0.03		$	0.09		$	0.05
Weighted average number of shares, basic				17,985			18,012			17,967			18,012
	Dilutive effect of stock options			514			45			300			61
Weighted average number of shares, diluted				18,499			18,057			18,267			18,073

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,
	2004			2003			% Change			2004			2003			% Change
Statement of Operations Data:
Net revenue	$	173,286		$	135,187			28.2	%	$	329,912		$	256,288			28.7	%
Adjusted EBITDA (a)	$	21,428		$	17,876			19.9	%	$	36,326		$	34,417			5.5	%
Adjusted EBITDA, before pre-opening expenses (a)	$	23,515		$	20,665			13.8	%	$	41,857		$	39,612			5.7	%
Income from operations	$	10,094		$	7,551			33.7	%	$	14,343		$	14,068			2.0	%
Net income	$	2,641		$	588			349.1	%	$	1,708		$	978			74.6	%
Earnings per share, diluted	$	0.14		$	0.03			366.7	%	$	0.09		$	0.05			80.0	%
(a) See Supplemental Financial Disclosure—Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures.
	Three Months Ended March 31,									Six Months Ended March 31,
	2004			2003			% Change			2004			2003			% Change
Selected Operating Data (consolidated):
Number of hospitals		12			9						12			9
Licensed beds (a)		704			580						704			580
Staffed and available beds (b)		593			464						593			464
Admissions (c)		10,781			8,326			29.5	%		20,436			15,100			35.3	%
Adjusted admissions (d)		13,590			10,274			32.3	%		25,766			18,652			38.1	%
Patient days (e)		38,048			30,638			24.2	%		72,342			55,377			30.6	%
Average length of stay (days) (f)		3.53			3.68			(4.1	)%		3.54			3.67			(3.5	)%
Occupancy (g)		70.5	%		73.4	%					66.7	%		65.6	%
Inpatient Catheterization Procedures		5,569			4,359			27.8	%		10,266			8,192			25.3	%
Inpatient Surgical Procedures		2,733			2,281			19.8	%		5,078			4,173			21.7	%
Hospital Division revenue	$	159,625		$	117,558			35.8	%	$	301,058		$	221,501			35.9	%
	Three Months Ended March 31,									Six Months Ended March 31,
	2004			2003			% Change			2004			2003			% Change
Selected Operating Data (same facility):
Number of hospitals		8			8						8			8
Licensed beds (a)		522			522						522			522
Staffed and available beds (b)		489			457						489			457
Admissions (c)		9,893			8,298			19.2	%		19,093			15,072			26.7	%
Adjusted admissions (d)		12,436			10,233			21.5	%		23,987			18,611			28.9	%
Patient days (e)		35,214			30,573			15.2	%		68,190			55,312			23.3	%
Average length of stay (days) (f)		3.56			3.68			(3.3	)%		3.57			3.67			(2.7	)%
Occupancy (g)		79.1	%		74.3	%					76.2	%		66.5	%
Inpatient Catheterization Procedures		4,990			4,345			14.8	%		9,403			8,178			15.0	%
Inpatient Surgical Procedures		2,448			2,273			7.7	%		4,637			4,165			11.3	%
Hospital Division revenue	$	138,662		$	117,405			18.1	%	$	269,074		$	221,348			21.6	%

(a)	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.
(b)	Staffed and available beds represent the weighted average number of beds that are readily available for patient use during the period.
(c)	Admissions represent the number of patients admitted for inpatient treatment.
(d)	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 mulitplying the quotient by admissions.
(e)	Patient days represent the total number of days of care provided to inpatients.
(f)	Average length of stay (days) represents the average number of days inpatients stay in our hospital.
(g)	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.

MEDCATH CORPORATION
SUPPLEMENTAL FINANCIAL DISCLOSURE — RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES
(Unaudited)

The following table reconciles Adjusted EBITDA and Adjusted EBITDA, before pre-opening expenses with MedCath’s Net income (loss) as derived directly from MedCath’s consolidated financial statements for the three months and six months ended March 31, 2004 and 2003.

		Three Months Ended March 31,						Six Months Ended March 31,
		2004			2003			2004			2003
		(in thousands)
Net income		$	2,641		$	588		$	1,708		$	978
Add:
	Income tax expense		1,630			393			1,003			652
	Minority interest share of earnings (losses) of consolidated subsidiaries		(65	)		1,811			(31	)		2,702
	Equity in net earnings of unconsolidated affiliates		(1,147	)		(1,064	)		(1,724	)		(1,818	)
	Other income, net		(2	)		(80	)		(6	)		(103	)
	Interest income		(161	)		(339	)		(394	)		(791	)
	Interest expense		7,198			6,242			13,787			12,448
	Loss (gain) on disposal of property, equipment and other assets		36			18			(48	)		88
	Amortization		290			437			580			874
	Depreciation		11,008			9,870			21,451			19,387
Adjusted EBITDA		$	21,428		$	17,876		$	36,326		$	34,417
Add:
	Pre-opening expenses		2,087			2,789			5,531			5,195
Adjusted EBITDA, before pre-opening expenses		$	23,515		$	20,665		$	41,857		$	39,612