Published:
MedCath Provides Preliminary Second Quarter Fiscal 2008 Earnings and Updates Fiscal 2008 Outlook
CHARLOTTE, N.C., April 21 /PRNewswire-FirstCall/ -- MedCath Corporation
(Nasdaq: MDTH) announced today preliminary summary results for its second
quarter of fiscal 2008, which ended March 31, 2008. In addition, MedCath
announced a revised fiscal 2008 outlook. MedCath's preliminary earnings for
the second quarter of fiscal 2008 and its revised outlook for fiscal 2008
account for Dayton Heart Hospital as an asset held for sale. MedCath
announced on March 24, 2008 that it had entered into a definitive agreement to
sell Dayton Heart Hospital.
MedCath anticipates that its net revenue for the second quarter of fiscal
2008 will be $156.7 to $157.3 million, its Adjusted EBITDA $23.4 to $24.0
million and its earnings from continuing operations $5.0 to $5.6 million or
$0.25 to $0.28 per diluted share. During the quarter, MedCath incurred prior
period cost report settlements which reduced preliminary net revenue and
Adjusted EBITDA by $0.2 million and income from continuing operations by $0.1
million. Also during the second fiscal quarter, MedCath incurred $0.2 million,
or $0.01 per diluted share, in share-based compensation expense and $0.3
million, or $0.02 per diluted share, in pre-opening expense related to its
development project inKingman, Arizona. Share-based compensation expense and
pre-opening expense are excluded from preliminary Adjusted EBITDA but are
included in preliminary income from continuing operations for the second
quarter of fiscal 2008.
"The operating environment in our fiscal second quarter reflects a shift
in product and payer mix that causes us to moderately recast our
expectations," said O. Edwin French, MedCath's President and Chief Executive
Officer. "Despite this, we are reinforced in our strategy and pleased with our
progress in rationalizing assets with a focus on expanding and diversifying
our services. The changes we experienced this quarter in our cardiovascular
services support our diversification strategy. In this regard, we have
announced projects that will add 34% capacity growth, the preponderance of
which is dedicated to diversification of our revenue base; something two years
ago was aspired to evolve. In addition, we believe we have organic growth that
remains through both cost containment and revenue opportunities in both our
Hospital Division and MedCath Partners."
MedCath's preliminary second quarter financial results indicate:
-- Lower than anticipated inpatient volumes. For the quarter, same-
facility admissions were down 0.9% in comparison to the second quarter
of fiscal 2007.
-- Lower than anticipated revenue per adjusted admission. For the quarter,
same-facility revenue per adjusted admission decreased 0.4% when
compared to the second quarter of fiscal 2007, which was below the
Company's expectation. The decline was primarily due to an increase in
charity care provided to patients receiving non-elective procedures; an
increase in the proportion of net revenue that was derived from
outpatient services, which typically are lower reimbursing procedures;
and a decrease in the Company's case mix index (CMI) during the
quarter, which measures the complexity of inpatient procedures
performed. The reduction in CMI was primarily due to a 3.2% reduction
in inpatient drug eluting stent procedures, a 6.6% decline in inpatient
bare metal stent procedures and a 2.9% decline in open heart
procedures.
-- Lower than expected net revenue and Adjusted EBITDA within the MedCath
Partners Division due to continued weaknesses in certain of the
division's majority owned catheterization laboratories and its mobile
leasing unit.
Revised 2008 Outlook
As part of the announcement today, MedCath is providing the following
Revised Outlook for its fiscal 2008, which ends September 30, 2008.
Revised 2008 Outlook
($ and shares in millions)
Net Revenue $620.0 to $630.0
Adjusted EBITDA $98.0 to $101.0
Income from continuing
operations $25.8 to $27.4
Maintenance Capital
Expenditures $33.0 to $37.0
Diluted Share Count 19.9 to 20.1
Consistent with the Company's past practice, the Revised 2008 Outlook
excludes pre-opening expense and share-based compensation expense. The Company
estimates pre-opening expense will total $1.0 million during fiscal 2008.
Conference Call to Discuss Second Quarter Results
MedCath Corporation (Nasdaq: MDTH) will host a conference call Wednesday,
May 7, at 9 a.m. Eastern Time to discuss results from its second quarter ended
March 31, 2008. The company will issue a press release announcing those
results prior to the earnings call.
What: Second Quarter Earnings Conference Call
When: 9:00 a.m. ET, Wednesday, May 7, 2008
How: Dial-in conference call
(877) 697-5351 (domestic callers), (706) 634-0602
(international callers)
Conference ID: 44446703
Live web cast at www.medcath.com
Contacts: O. Edwin French, President & CEO
Art Parker, Interim Chief Financial Officer
The conference call will be archived and accessible by dialing
(800) 642-1687 (domestic callers) or (706) 645-9291 (international callers).
The archived conference ID is 44446703. The call will be accessible until
11:59 p.m. ET on May 14, 2008. It also will be available on the company's web
site (www.medcath.com) on or immediately following May 7 for 30 days.
MedCath Corporation, headquartered inCharlotte, N.C., is a healthcare
provider focused on high acuity services with the diagnosis and treatment of
cardiovascular disease being a primary service offering. Following completion
of the divestiture of Dayton Heart Hospital, MedCath will own an interest in
and operate nine hospitals with a total of 616 licensed beds, located in
Arizona,Arkansas,California,Louisiana,New Mexico,South Dakota, andTexas.
MedCath is in the process of developing its tenth hospital inKingman,
Arizona. In addition, MedCath and its subsidiary MedCath Partners provide
services in diagnostic and therapeutic facilities in various states.
Use of Non-GAAP Financial Measures
This release contains measures of MedCath's historical financial
performance that are not calculated and presented in conformity with generally
accepted accounting principles ("GAAP"), including Adjusted EBITDA. Adjusted
EBITDA represents MedCath's income from continuing operations before interest
expense; interest and other income, net; income tax expense; depreciation;
amortization; share-based compensation expense; pre-opening expenses; loss on
disposal of property, equipment and other assets; loss on early extinguishment
of debt; equity in net earnings of unconsolidated affiliates; minority
interest share of earnings of consolidated subsidiaries, share-based
compensation, and pre-opening expenses. MedCath's management uses Adjusted
EBITDA to measure the performance of the company's various operating entities,
to compare actual results to historical and budgeted results, and to make
capital allocation decisions. Management provides Adjusted EBITDA to investors
to assist them in performing their analyses of MedCath's historical operating
results. Further, management believes that many investors in MedCath also
invest in, or have knowledge of, other healthcare companies that use Adjusted
EBITDA as a financial performance measure. Because Adjusted EBITDA is a non-
GAAP measure, Adjusted EBITDA, as defined above, may not be comparable to
other similarly titled measures of other companies. MedCath has included a
supplemental schedule with the financial statements that accompanies this
press release that reconciles historical Adjusted EBITDA to MedCath's income
from continuing operations.
Parts of this announcement contain forward-looking statements that involve
risks and uncertainties. Although management believes that these forward-
looking statements are based on reasonable assumptions, these assumptions are
inherently subject to significant economic, regulatory and competitive
uncertainties and contingencies that are difficult or impossible to predict
accurately and are beyond our control. Actual results could differ materially
from those projected in these forward-looking statements. We do not assume any
obligation to update these statements in a news release or otherwise should
material facts or circumstances change in ways that would affect their
accuracy.
These various risks and uncertainties are described in detail in MedCath's
Form 10-K filed with the Securities and Exchange Commission on December 14,
2007, and MedCath' other filings with the Securities and Exchange Commission.
These filings are available on the internet site of the Securities and
Exchange Commission at http://www.sec.gov.
EXHIBIT 99.1
MEDCATH CORPORATION
SUPPLEMENTAL FINANCIAL DISCLOSURE - RECONCILIATION OF GAAP FINANCIAL
MEASURES TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
The following table reconciles preliminary Adjusted EBITDA with MedCath's
unaudited preliminary income from operations
for the second quarter ending March 31, 2008:
Three Months Ended March 31,
2008 Range
(in millions)
Income from continuing operations $5.0 $5.6
Add:
Income tax expense $3.5 $3.5
Minority interest share of
earnings of consolidated
subsidiaries $5.2 $5.2
Equity in net earnings of
unconsolidated affiliates $(2.2) $(2.2)
Interest expense, net $3.4 $3.4
Loss on disposal of equipment $0.1 $0.1
Depreciation and amortization $7.9 $7.9
Pre-opening expenses $0.3 $0.3
Share-based compensation expense $0.2 $0.2
Adjusted EBITDA $23.4 $24.0
The following table reconciles estimated Adjusted EBITDA with MedCath's
estimated income from operations excluding pre-opening expenses and share-
based compensation for the fiscal year ending September 30, 2008:
Fiscal 2008 Guidance Range
(in millions)
Income from continuing operations
excluding pre-opening expense
and share-based compensation
expense $25.8 $27.4
Add:
Income tax expense $17.6 $18.3
Minority interest share of
earnings of consolidated
subsidiaries $20.5 $21.1
Equity in net earnings of
unconsolidated affiliates $(9.1) $(9.2)
Interest expense, net $13.2 $13.2
Depreciation and amortization $30.0 $30.2
Adjusted EBITDA $98.0 $101.0
SOURCE MedCath Corporation
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