Medcath (MDTH) 8-K Results of Operations and Financial Condition

Exhibit 99.1

MEDCATH CORPORATION
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(Presenting Dayton Heart Hospital as a Discontinued Operation for Each Period Presented)
(In thousands, except per share and selected operating data)
(Unaudited)

	Fiscal Year			Fiscal Year
	Ended			Ended
	September 30,			September 30,
	2005			2006
Consolidated Statements of Operations: (in thousands, except per share data)
Net revenue	$	605,323		$	644,417
Operating expenses:
Personnel expense		185,760			208,530
Medical supplies expense		170,838			177,852
Bad debt expense		45,948			54,051
Other operating expenses		123,454			128,475
Pre-opening expenses		—			—
Depreciation		32,828			32,624
Amortization		1,160			1,008
Loss (gain) on disposal of property, equipment and other assets		(645	)		(158	)
Impairments of long-lived assets		2,662			458
Total operating expenses		562,005			602,840
Income from operations		43,318			41,577
Other income (expenses):
Interest expense		31,382			32,742
Loss on early extinguishment of debt		—			—
Interest and other income, net		(3,003	)		(7,724	)
Equity in net earnings of unconsolidated affiliates		(3,356	)		(4,919	)
Total other expenses, net		25,023			20,099
Income (loss) from continuing operations before minority interest, income taxes and discontinued operations		18,295			21,478
Minority interest share of earnings of consolidated subsidiaries		12,638			14,080
Income (loss) from continuing operations before income taxes and discontinued operations		5,657			7,398
Income tax expense (benefit)		2,964			3,540
Income (loss) from continuing operations		2,693			3,858
Income (loss) from discontinued operations		6,098			8,718
Net income (loss)	$	8,791		$	12,576
Earnings (loss) per share, basic
Continuing operations	$	0.15		$	0.21
Discontinued operations		0.33			0.46
Earnings (loss) per share, basic	$	0.48		$	0.67
Earnings (loss) per share, diluted
Continuing operations	$	0.14		$	0.20
Discontinued operations		0.31			0.44
Earnings (loss) per share, diluted	$	0.45		$	0.64
Weighted average number of shares, basic		18,286			18,656
Dilutive effect of stock options and restricted stock		1,184			899
Weighted average number of shares, diluted		19,470			19,555
Consolidated Balance Sheet Data: (in thousands)
Cash and cash equivalents	$	140,027		$	193,497
Working capital		135,281			197,275
Total assets		763,205			785,849
Long-term debt and capital leases, excluding current maturities		289,407			286,597
Other long-term obligations		451			309
Stockholders’ equity		282,741			317,660
Selected Operating Data (consolidated) (a):
Number of hospitals		8			8
Licensed beds (b)		533			533
Staffed and available beds (c)		499			516
Admissions (d)		36,274			37,901
Adjusted admissions (e)		47,234			49,622
Patient days (f)		126,240			124,358
Adjusted patient days (g)		163,420			162,813
Average length of stay (h)		3.48			3.28
Occupancy (i)		69.3	%		66.0	%
Inpatient catheterization procedures		18,595			19,072
Inpatient surgical procedures		9,936			9,973

Exhibit 99.1

MEDCATH CORPORATION
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(Presenting Dayton Heart Hospital as a Discontinued Operation for Each Period Presented)
(In thousands, except per share and selected operating data)
(Unaudited)

													Fiscal Year
	Quarter Ended			Quarter Ended			Quarter Ended			Quarter Ended			Ended			Quarter Ended
	December 31,			March 31,			June 30,			September 30,			September 30,			December 31,
	2006			2007			2007			2007			2007			2007
Consolidated Statements of Operations: (in thousands, except per share data)
Net revenue	$	160,387		$	176,640		$	178,492		$	145,084		$	660,603		$	148,850
Operating expenses:
Personnel expense		51,941			55,977			54,383			47,200			209,501			50,865
Medical supplies expense		44,155			47,099			46,593			38,768			176,615			39,629
Bad debt expense		13,128			14,635			14,585			9,012			51,360			11,285
Other operating expenses		33,101			34,257			34,561			27,851			129,770			29,145
Pre-opening expenses		—			—			—			555			555			248
Depreciation		8,270			8,180			8,038			6,748			31,236			7,366
Amortization		252			127			126			126			631			127
Loss (gain) on disposal of property, equipment and other assets		57			796			175			419			1,447			28
Impairments of long-lived assets		—			—			—			—			—			—
Total operating expenses		150,904			161,071			158,461			130,679			601,115			138,693
Income from operations		9,483			15,569			20,031			14,405			59,488			10,157
Other income (expenses):
Interest expense		7,335			1,213			5,125			8,481			22,154			3,931
Loss on early extinguishment of debt		4,480			5,142			—			223			9,845			—
Interest and other income, net		(2,721	)		(1,805	)		(1,749	)		(1,568	)		(7,843	)		(1,167	)
Equity in net earnings of unconsolidated affiliates		(1,438	)		(1,482	)		(1,175	)		(1,644	)		(5,739	)		(2,025	)
Total other expenses, net		7,656			3,068			2,201			5,492			18,417			739
Income (loss) from continuing operations before minority interest, income taxes and discontinued operations		1,827			12,501			17,830			8,913			41,071			9,418
Minority interest share of earnings of consolidated subsidiaries		2,206			3,268			4,006			4,437			13,917			4,452
Income (loss) from continuing operations before income taxes and discontinued operations		(379	)		9,233			13,824			4,476			27,154			4,966
Income tax expense (benefit)		(18	)		4,504			5,395			2,022			11,903			2,349
Income (loss) from continuing operations		(361	)		4,729			8,429			2,454			15,251			2,617
Income (loss) from discontinued operations		(4,535	)		1,521			836			(1,546	)		(3,724	)		447
Net income (loss)	$	(4,896	)	$	6,250		$	9,265		$	908		$	11,527		$	3,064
Earnings (loss) per share, basic
Continuing operations	$	(0.02	)	$	0.23		$	0.40		$	0.11		$	0.72		$	0.12
Discontinued operations		(0.22	)		0.07			0.04			(0.07	)		(0.18	)		0.02
Earnings (loss) per share, basic	$	(0.24	)	$	0.30		$	0.44		$	0.04		$	0.54		$	0.14
Earnings (loss) per share, diluted
Continuing operations	$	(0.02	)	$	0.22		$	0.38		$	0.11		$	0.70		$	0.12
Discontinued operations		(0.22	)		0.07			0.04			(0.07	)		(0.17	)		0.02
Earnings (loss) per share, diluted	$	(0.24	)	$	0.29		$	0.42		$	0.04		$	0.53		$	0.14
Weighted average number of shares, basic		20,121			21,019			21,144			21,202			21,202			21,028
Dilutive effect of stock options and restricted stock		—			625			682			579			579			263
Weighted average number of shares, diluted		20,121			21,644			21,826			21,781			21,781			21,291
Consolidated Balance Sheet Data: (in thousands)
Cash and cash equivalents	$	175,043		$	129,036		$	138,569		$	140,276		$	140,276		$	114,499
Working capital		205,806			181,331			193,371			179,041			179,041			178,374
Total assets		753,968			715,741			732,013			669,415			669,415			634,353
Long-term debt and capital leases, excluding current maturities		249,321			209,418			208,686			148,191			148,191			147,160
Other long-term obligations		265			299			277			460			460			2,748
Stockholders’ equity		356,945			368,075			379,733			385,624			385,624			373,757
Selected Operating Data (consolidated) (a):
Number of hospitals		8			8			8			7			7			7
Licensed beds (b)		533			533			533			421			421			421
Staffed and available beds (c)		516			512			516			404			404			404
Admissions (d)		8,927			9,876			9,455			7,118			35,373			7,150
Adjusted admissions (e)		12,286			13,470			12,997			9,622			48,306			9,830
Patient days (f)		30,843			34,010			31,153			24,290			120,556			25,460
Adjusted patient days (g)		42,237			46,173			42,564			33,011			164,131			35,144
Average length of stay (h)		3.46			3.44			3.29			3.41			3.41			3.56
Occupancy (i)		65.0	%		73.8	%		66.3	%		65.4	%		81.8	%		68.5	%
Inpatient catheterization procedures (j)		4,375			4,904			4,738			3,904			17,925			4,049
Inpatient surgical procedures (k)		2,279			2,565			2,608			1,959			9,481			1,947

Exhibit 99.1

(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)	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 volume. 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.
(j)	Inpatients with a catheterization procedure represent the number of inpatients with a procedure performed in one of the hospitals’ catheterization labs during the period.
(k)	Inpatient surgical procedures represent the number of surgical procedures performed on inpatients during the period.