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,
	2005			2004			2005			2004
Net revenue	$	195,116		$	176,165		$	571,890		$	499,968
Operating expenses:
Personnel expense		58,663			54,818			175,278			154,245
Medical supplies expense		55,838			50,983			163,888			138,940
Bad debt expense		14,814			9,556			38,245			32,819
Other operating expenses		39,313			37,353			115,218			105,468
Pre-opening expenses		—			—			—			5,103
Depreciation		9,517			10,921			28,684			31,074
Amortization		290			290			870			870
Loss (gain) on disposal of property, equipment and other assets		171			24			245			(27	)
Total operating expenses		178,606			163,945			522,428			468,492
Income from operations		16,510			12,220			49,462			31,476
Other income (expenses):
Interest expense		(8,454	)		(6,863	)		(24,227	)		(19,925	)
Interest and other income, net		887			218			1,903			614
Equity in net earnings of unconsolidated affiliates		899			900			2,554			2,624
Total other expenses, net		(6,668	)		(5,745	)		(19,770	)		(16,687	)
Income from continuing operations before minority interest, income taxes and discontinued operations		9,842			6,475			29,692			14,789
Minority interest share of earnings of consolidated subsidiaries		(3,956	)		(2,852	)		(12,357	)		(3,878	)
Income from continuing operations before income taxes and discontinued operations		5,886			3,623			17,335			10,911
Income tax expense		2,528			1,169			7,107			3,978
Income from continuing operations		3,358			2,454			10,228			6,933
Income (loss) from discontinued operations, net of taxes		(609	)		(1,074	)		864			(3,845	)
Net income	$	2,749		$	1,380		$	11,092		$	3,088
Earnings (loss) per share, basic
Continuing operations	$	0.18		$	0.14		$	0.56		$	0.38
Discontinued operations		(0.03	)		(0.06	)		0.05			(0.21	)
Earnings per share, basic	$	0.15		$	0.08		$	0.61		$	0.17
Earnings (loss) per share, diluted
Continuing operations	$	0.17		$	0.13		$	0.53		$	0.38
Discontinued operations		(0.03	)		(0.06	)		0.04			(0.21	)
Earnings per share, diluted	$	0.14		$	0.07		$	0.57			0.17
Weighted average number of shares, basic		18,425			17,990			18,216			17,974
Dilutive effect of stock options		1,248			826			1,193			482
Weighted average number of shares, diluted		19,673			18,816			19,409			18,456

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,
	2005			2004			% Change			2005			2004			% Change
Statement of Operations Data:
Net revenue	$	195,116		$	176,165			10.8	%	$	571,890		$	499,968			14.4	%
Adjusted EBITDA (1)	$	26,488		$	23,455			12.9	%	$	79,261		$	63,393			25.0	%
Income from operations	$	16,510		$	12,220			35.1	%	$	49,462		$	31,476			57.1	%
Income from continuing operations	$	3,358		$	2,454			36.8	%	$	10,228		$	6,933			47.5	%
Earnings per share from continuing operations, basic	$	0.18		$	0.14			33.6	%	$	0.56		$	0.38			49.4	%
Earnings per share from continuing operations, diluted	$	0.17		$	0.13			30.9	%	$	0.53		$	0.38			40.3	%
(1) See Supplemental Financial Disclosure—Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures.
	Three Months Ended June 30,									Nine Months Ended June 30,
	2005			2004			% Change			2005			2004			% Change
Selected Operating Data (consolidated) (a):
Number of hospitals		11			11						11			11
Licensed beds (b)		672			672						672			672
Staffed and available beds (c)		631			601						631			601
Admissions (d)		11,345			10,774			5.3	%		33,947			30,985			9.6	%
Adjusted admissions (e)		14,963			13,713			9.1	%		44,851			39,188			14.5	%
Patient days (f)		39,232			36,460			7.6	%		118,893			108,119			10.0	%
Adjusted patient days (g)		51,443			46,255			11.2	%		156,264			136,451			14.5	%
Average length of stay (days) (h)		3.46			3.38			2.4	%		3.50			3.49			0.3	%
Occupancy (i)		68.3	%		66.7	%					69.0	%		65.7	%
Inpatient catheterization procedures		6,028			5,764			4.6	%		17,727			15,871			11.7	%
Inpatient surgical procedures		3,104			2,758			12.5	%		9,030			7,768			16.2	%
Hospital division revenue	$	181,068		$	162,573			11.4	%	$	530,541		$	457,521			16.0	%
	Three Months Ended June 30,									Nine Months Ended June 30,
	2005			2004			% Change			2005			2004			% Change
Selected Operating Data (same facility) (a):
Number of hospitals		11			11						9			9
Licensed beds (b)		672			672						580			580
Staffed and available beds (c)		631			601						547			531
Admissions (d)		11,345			10,774			5.3	%		30,414			29,797			2.1	%
Adjusted admissions (e)		14,963			13,713			9.1	%		40,749			37,804			7.8	%
Patient days (f)		39,232			36,460			7.6	%		106,099			104,247			1.8	%
Adjusted patient days (g)		51,443			46,255			11.2	%		141,431			131,945			7.2	%
Average length of stay (days) (h)		3.46			3.38			2.4	%		3.49			3.50			(0.3	)%
Occupancy (i)		68.3	%		66.7	%					71.0	%		71.7	%
Inpatient catheterization procedures		6,028			5,764			4.6	%		15,259			14,992			1.8	%
Inpatient surgical procedures		3,104			2,758			12.5	%		8,171			7,489			9.1	%
Hospital division revenue	$	181,068		$	162,573			11.4	%	$	469,272		$	436,131			7.6	%

(a)	Selected operating data includes consolidated hospitals 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 nine months ended June 30, 2005 excludes the results of Texsan Heart Hospital and Heart Hospital of Lafayette.
(b)	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.
(c)	Staffed and available beds represent the number of beds that are readily available for patient use at the end of the period.
(d)	Admissions represent the number of patients admitted for inpatient treatment.
(e)	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.
(f)	Patient days represent the total number of days of care provided to inpatients.
(g)	Adjusted patient days is a general measure of combined inpatient and outpatient days. We computed adjusted patient days by dividing gross patient revenue by gross inpatient revenue and then multiplying the quotient by patient days.
(h)	Average length of stay (days) represents the average number of days inpatients stay in our hospitals.
(i)	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 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, 2005 and 2004.

	Three Months Ended June 30,						Nine Months Ended June 30,
	2005			2004			2005			2004
				(in thousands)
Income from continuing operations	$	3,358		$	2,454		$	10,228		$	6,933
Add:
Income tax expense		2,528			1,169			7,107			3,978
Minority interest share of earnings of consolidated subsidiaries		3,956			2,852			12,357			3,878
Equity in net earnings of unconsolidated affiliates		(899	)		(900	)		(2,554	)		(2,624	)
Interest and other income, net		(887	)		(218	)		(1,903	)		(614	)
Interest expense		8,454			6,863			24,227			19,925
Loss (gain) on disposal of property, equipment and other assets		171			24			245			(27	)
Amortization		290			290			870			870
Depreciation		9,517			10,921			28,684			31,074
Adjusted EBITDA	$	26,488		$	23,455		$	79,261		$	63,393