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

Exhibit 99.2

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

	Three Months Ended December 31,
	2008			2007
Net revenue	$	153,103		$	146,695
Operating expenses:
Personnel expense		50,656			50,384
Medical supplies expense		42,651			38,742
Bad debt expense		11,393			11,285
Other operating expenses		32,235			29,016
Pre-opening expenses		207			248
Depreciation		7,835			7,341
Amortization		149			127
Loss on disposal of property, equipment and other assets		73			28
Total operating expenses		145,199			137,171
Income from operations		7,904			9,524
Other income (expenses):
Interest expense		(2,857	)		(3,931	)
Loss on early extinguishment of debt		(6,961	)		—
Interest and other income, net		100			1,158
Equity in net earnings of unconsolidated affiliates		2,065			2,025
Total other expenses, net		(7,653	)		(748	)
Income from continuing operations before minority interest and income taxes		251			8,776
Minority interest share of earnings of consolidated subsidiaries		(2,776	)		(4,137	)
Income from continuing operations before income taxes		(2,525	)		4,639
Income tax (benefit)/expense		(909	)		2,348
(Loss)/income from continuing operations		(1,616	)		2,291
Income from discontinued operations, net of taxes		3,862			773
Net income	$	2,246		$	3,064
Earnings (loss) per share, basic
Continuing operations	$	(0.08	)	$	0.11
Discontinued operations		0.19			0.03
Earnings (loss) per share, basic	$	0.11		$	0.14
Earnings (loss) per share, diluted
Continuing operations	$	(0.08	)	$	0.11
Discontinued operations		0.19			0.03
Earnings (loss) per share, diluted	$	0.11		$	0.14
Weighted average number of shares, basic		19,599			21,028
Dilutive effect of stock options and restricted stock		—			263
Weighted average number of shares, diluted		19,599			21,291

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

	December 31,			September 30,
	2008			2008
	(Unaudited)
Current assets:
Cash and cash equivalents	$	56,912		$	93,836
Restricted cash		3,163			3,154
Accounts receivable, net		86,572			83,875
Income tax receivable, net		1,696			3,091
Medical supplies		17,838			15,479
Deferred income tax assets		9,978			9,769
Prepaid expenses and other current assets		10,439			9,796
Current assets of discontinued operations		12,770			20,776
Total current assets		199,368			239,776
Property and equipment, net		341,942			323,729
Investments in affiliates		10,742			15,285
Goodwill		60,174			60,174
Other intangible assets, net		5,914			6,063
Other assets		9,748			8,378
Long-term assets of discontinued operations		—			51
Total assets	$	627,888		$	653,456
Current liabilities:
Accounts payable	$	42,128		$	41,642
Accrued compensation and benefits		17,283			16,872
Other accrued liabilities		21,080			24,054
Current portion of long-term debt and obligations under capital leases		15,341			31,920
Current liabilities of discontinued operations		9,510			10,184
Total current liabilities		105,342			124,672
Long-term debt		115,578			115,628
Obligations under capital leases		1,956			2,087
Deferred income tax liabilities		12,276			12,352
Other long-term obligations		4,425			4,454
Total liabilities		239,577			259,193
Minority interest in equity of consolidated subsidiaries		15,880			24,667
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; 21,588,880 issued and 19,634,519 outstanding at December 31, 2008; 21,553,054 issued and 19,598693 outstanding at September 30, 2008		216			216
Paid-in capital		456,531			455,494
Accumulated deficit		(38,892	)		(41,138	)
Accumulated other comprehensive loss		(627	)		(179	)
Treasury stock, at cost;
1,954,361 shares at December 31, 2008
1,954,361 shares at September 30, 2008		(44,797	)		(44,797	)
Total stockholders’ equity		372,431			369,596
Total liabilities and stockholders’ equity	$	627,888		$	653,456

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

	Three Months Ended December 31,
	2008			2007		% Change
Statement of Operations Data:
Net revenue	$	153,103		$	146,695		4.4	%
Adjusted EBITDA (1)	$	17,166		$	20,977		(18.2	)%
Income from operations	$	7,904		$	9,524		(17.0	)%
(Loss)/income from continuing operations	$	(1,616	)	$	2,291		(170.5	)%
Earnings (loss) per share from continuing operations, basic	$	(0.08	)	$	0.11		(172.7	)%
Earnings (loss) per share from continuing operations, diluted	$	(0.08	)	$	0.11		(172.7	)%

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

	Three Months Ended December 31,
	2008			2007			% Change
Selected Operating Data (a):
Number of hospitals		7			7
Licensed beds (c)		509			421
Staffed and available beds (d)		463			404
Admissions (e)		6,757			7,150			(5.5	)%
Adjusted admissions (f)		9,874			9,829			0.5	%
Patient days (g)		25,181			25,460			(1.1	)%
Adjusted patient days (h)		37,044			35,144			5.4	%
Average length of stay (days) (i)		3.73			3.56			4.8	%
Occupancy (j)		59.1	%		68.5	%
Inpatient catheterization procedures (k)		3,552			4,049			(12.3	)%
Inpatient surgical procedures (l)		2,001			1,947			2.8	%
Hospital net revenue	$	144,225		$	137,151			5.2	%
Combined Operating Data (b):
Number of hospitals		9			9
Licensed beds (c)		676			588
Staffed and available beds (d)		628			567
Admissions (e)		9,740			9,769			(0.3	)%
Adjusted admissions (f)		14,622			14,167			3.2	%
Patient days (g)		34,189			33,725			1.4	%
Adjusted patient days (h)		51,162			48,482			5.5	%
Average length of stay (days) (i)		3.51			3.45			1.7	%
Occupancy (j)		59.2	%		64.7	%
Inpatient catheterization procedures (k)		4,385			4,776			(8.2	)%
Inpatient surgical procedures (l)		2,622			2,686			(2.4	)%
Hospital net revenue	$	185,023		$	176,706			4.7	%

(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.
(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 Adjusted EBITDA with MedCath’s income from continuing operations as derived directly from MedCath’s unaudited consolidated financial statements for the three months ended December 31, 2008 and 2007.

	Three Months Ended December 31,
	2008			2007
	(in thousands)
(Loss)/income from continuing operations	$	(1,616	)	$	2,291
Add:
Income tax expense		(909	)		2,348
Minority interest share of earnings of consolidated subsidiaries		2,776			4,137
Equity in net earnings of unconsolidated affiliates		(2,065	)		(2,025	)
Interest and other income, net		(100	)		(1,158	)
Loss on early extinguishment of debt		6,961			—
Interest expense		2,857			3,931
Loss on disposal of property, equipment and other assets		73			28
Amortization		149			127
Depreciation		7,835			7,341
Pre-opening expenses		207			248
Share-based compensation expense		998			3,709
Adjusted EBITDA	$	17,166		$	20,977