CHARLOTTE, N.C., May 21 /PRNewswire-FirstCall/ -- MedCath Corporation (Nasdaq: MDTH), a healthcare provider focused on high acuity healthcare services, predominately the diagnosis and treatment of cardiovascular disease, today announced its operating results for its second quarter of fiscal 2009, which ended March 31, 2009.
Second Quarter 2009 Results
MedCath's reported net revenue increased 3.0% to $158.9 million in the second quarter of fiscal 2009 from $154.2 million in the second quarter of fiscal 2008. Income from operations decreased to $11.7 million from $14.4 million in the second quarter of fiscal 2008 and Adjusted EBITDA decreased 8.9% to $20.8 million from $22.8 million in the same period of the prior year. MedCath's income from continuing operations was $5.4 million, or $0.28 per diluted share, in the second quarter of fiscal 2009 compared to $5.5 million, or $0.28 per diluted share, in the second quarter of fiscal 2008.
Adjusted EBITDA in this release does not include share-based compensation or pre-opening expenses, but these items are included as a component of income from continuing operations. Share-based compensation expense totaled $0.8 million in the second quarter of fiscal 2009, or $0.03 per diluted share, compared with a $0.2 million expense, or $.01 per diluted share, in the second quarter of fiscal 2008. Pre-opening expenses totaled $0.4 million in the second quarter of fiscal 2009, compared with $0.2 million in the second quarter of fiscal 2008.
As shown below, EPS for the quarter, adjusted for share-based compensation expense and pre-opening expenses totaled $0.31 for the quarter:
EPS from continuing operations $0.28 Adjustments (net of tax effect) Pre-opening expenses $0.01 Share-based compensation expense $0.03 EPS, adjusted for above items(1) $0.31 (1) does not add due to rounding
"We experienced improved operating momentum this quarter in comparison to the first quarter as Adjusted EBITDA and Adjusted EBITDA margin grew meaningfully and cash flow from operations remained strong," said Ed French, MedCath's President and Chief Executive Officer. "In addition to earnings momentum, we're continuing to execute on our growth strategy and anticipate opening the expansion of our Louisiana Medical Center and Heart Hospital next week."
Operating Statistics, Cash Flow and Capital Expenditures
Same facility hospital admissions in the second quarter of fiscal 2009 were 7,052, down 10.2% compared with the second quarter of fiscal 2008. Adjusted admissions totaled 10,556, down 2.4% compared with the second quarter of fiscal 2008. Same facility hospital outpatient visits totaled 8,004 in the second quarter of fiscal 2009, up 17.9% in comparison with the second quarter of fiscal 2008.
MedCath's commercial admissions equaled 22.6% of total admissions and were unchanged from the year earlier period. Self-pay admissions equaled 1.9% of total admissions in the second quarter of fiscal 2009, in comparison to 2.4% of total admissions in the second quarter of fiscal 2008. Total uncompensated care, which includes charity care plus bad debt expense, equaled 8.3% of hospital division net patient revenue before the deduction for charity care in the second quarter of fiscal 2009 compared to 10.6% in the second quarter of fiscal 2008 and 8.5% in the first quarter of fiscal 2009.
Net cash provided by operating activities of continuing operations for the second quarter of fiscal 2009 was $17.6 million compared to $16.6 million in the second quarter of fiscal 2008. Cash paid for capital expenditures during the quarter totaled $23.8 million, which included $7.4 million related to maintenance expenditures and $16.4 million related to MedCath's construction projects.
Internal Assessment Update
On May 6, 2009, MedCath announced that it was undertaking an internal assessment, under the supervision of its Audit Committee, of certain aspects of its operations and controls. MedCath has completed its internal assessment with the assistance of its professional advisors, and determined that there was no material impact on its current and previously issued financial statements, results of operations or cash flows. In addition, MedCath is in compliance with all reporting and other requirements contained in the credit agreement related to its $75 million term loan and $85 million revolver.
Use of Non-GAAP Financial Measures
This release contains a measure of MedCath's historical financial performance that is not calculated and presented in conformity with generally accepted accounting principles ("GAAP"), 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; and minority interest share of earnings of consolidated subsidiaries. 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.
Management will discuss and answer questions regarding MedCath's quarterly results and the results of its internal assessment Friday, May 22, 2009, during a 10 a.m. ET conference call. In the United States, you may participate by dialing (877) 697-5351. International callers should dial (706) 634-0602. The conference ID for both domestic and international callers is 11062123. A live web cast will also be available on the company's web site, www.medcath.com. This information will be available on the web site on or immediately following the conference call for 30 days. A recorded replay of the call will be available until 11:59 p.m. ET, June 5, 2009. To access the replay, domestic callers should dial (800) 642-1687 and international callers should dial (706) 645-9291. The archived conference ID is 11062123. This press release and the financial information included therewith will be accessible on the web, by going to www.medcath.com, "Investor Relations," then clicking on "News."
MedCath Corporation, headquartered in Charlotte, N.C., is a healthcare provider focused on high acuity services with the diagnosis and treatment of cardiovascular disease being a primary service offering. MedCath owns an interest in and operates nine hospitals with a total of 676 licensed beds, located in Arizona, Arkansas, California, Louisiana, New Mexico, South Dakota, and Texas. MedCath is in the process of developing its tenth hospital, which is anticipated to open in fall 2009, in Kingman, Ariz. In addition, MedCath and its subsidiary MedCath Partners provide services in diagnostic and therapeutic facilities in various states.
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 including, but not limited to, enactment of changes in federal law that would limit physician hospital ownership. 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. The preparation of MedCath's second quarter operating results required management to make estimates and assumptions that affect reported amounts of revenues and expenses. There is a reasonable possibility that actual results may vary significantly from those estimates.
These various risks and uncertainties are described in detail in "Risk Factors" in MedCath's Annual Report or Form 10-K for the year ended September 30, 2008 filed with the Securities and Exchange Commission on December 15, 2008, as updated in our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2009. Copies of this form including exhibits are available on the internet site of the Securities and Exchange Commission at http://www.sec.gov.
MEDCATH CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended March 31, March 31, 2009 2008 2009 2008 Net revenue $158,867 $154,200 $311,970 $300,895 Operating expenses: Personnel expense 52,127 49,156 102,783 99,540 Medical supplies expense 43,811 41,656 86,462 80,398 Bad debt expense 10,618 10,332 22,011 21,617 Other operating expenses 32,344 30,424 64,580 59,442 Pre-opening expenses 380 245 587 493 Depreciation 7,565 7,689 15,400 15,030 Amortization 210 135 359 262 Loss on disposal of property, equipment and other assets 91 138 164 166 Total operating expenses 147,146 139,775 292,346 276,948 Income from operations 11,721 14,425 19,624 23,947 Other income (expenses): Interest expense (1,338) (3,864) (4,194) (7,796) Gain (loss) on early extinguishment of debt 259 - (6,702) - Interest and other income, net 73 485 173 1,646 Equity in net earnings of unconsolidated affiliates 2,714 2,181 4,779 4,206 Total other income (expense), net 1,708 (1,198) (5,944) (1,944) Income from continuing operations before minority interest and income taxes 13,429 13,227 13,680 22,003 Minority interest share of earnings of consolidated subsidiaries (4,639) (4,642) (7,415) (8,779) Income from continuing operations before income taxes 8,790 8,585 6,265 13,224 Income tax expense 3,372 3,099 2,463 5,448 Income from continuing operations 5,418 5,486 3,802 7,776 Income from discontinued operations, net of taxes 164 199 4,026 973 Net income $5,582 $5,685 $7,828 $8,749 Earnings per share, basic Continuing operations $0.28 $0.28 $0.19 $0.38 Discontinued operations 0.01 0.01 0.21 0.05 Earnings per share, basic $0.28 $0.29 $0.40 $0.43 Earnings per share, diluted Continuing operations $0.28 $0.28 $0.19 $0.37 Discontinued operations 0.01 0.01 0.21 0.05 Earnings per share, diluted $0.28 $0.29 $0.40 $0.42 Weighted average number of shares, basic 19,664 19,841 19,631 20,438 Dilutive effect of stock options and restricted stock 26 121 - 202 Weighted average number of shares, diluted 19,690 19,962 19,631 20,640 MEDCATH CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share data) March 31, September 30, 2009 2008 (Unaudited) Current assets: Cash and cash equivalents $42,883 $93,836 Restricted cash 3,166 3,154 Accounts receivable, net 89,638 83,875 Income tax receivable, net 1,275 3,091 Medical supplies 17,661 15,479 Deferred income tax assets 8,643 9,769 Prepaid expenses and other current assets 10,545 9,796 Current assets of discontinued operations 12,531 20,776 Total current assets 186,342 239,776 Property and equipment, net 357,285 323,729 Investments in affiliates 12,676 15,285 Goodwill 60,174 60,174 Other intangible assets, net 6,266 6,063 Other assets 7,767 8,378 Long-term assets of discontinued operations - 51 Total assets $630,510 $653,456 Current liabilities: Accounts payable $41,513 $41,642 Accrued compensation and benefits 19,596 16,872 Other accrued liabilities 22,265 24,054 Current portion of long-term debt and obligations under capital leases 11,991 31,920 Current liabilities of discontinued operations 9,465 10,184 Total current liabilities 104,830 124,672 Long-term debt 112,038 115,628 Obligations under capital leases 1,845 2,087 Deferred income tax liabilities 12,170 12,352 Other long-term obligations 3,006 4,454 Total liabilities 233,889 259,193 Minority interest in equity of consolidated subsidiaries 18,929 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; 21,684,780 issued and 19,730,419 outstanding at March 31, 2009; 21,553,054 issued and 19,598,693 outstanding at September 30, 2008 216 216 Paid-in capital 456,035 455,494 Accumulated deficit (33,310) (41,138) Accumulated other comprehensive loss (452) (179) Treasury stock, at cost; 1,954,361 shares at March 31, 2009 1,954,361 shares at September 30, 2008 (44,797) (44,797) Total stockholders' equity 377,692 369,596 Total liabilities and stockholders' equity $630,510 $653,456 MEDCATH CORPORATION SELECTED OPERATING DATA (In thousands, except per share data and selected operating data) (Unaudited) Three months Ended March 31, 2009 2008 % Change Statement of Operations Data: Net revenue $158,867 $154,200 3.0% Adjusted EBITDA (1) $20,806 $22,845 (8.9)% Income from operations $11,721 $14,425 (18.7)% Income from continuing operations $5,418 $5,486 (1.2)% Earnings per share from continuing operations, basic $0.28 $0.28 - Earnings per share from continuing operations, diluted $0.28 $0.28 - Six Months Ended March 31, 2009 2008 % Change Statement of Operations Data: Net revenue $311,970 $300,895 3.7% Adjusted EBITDA (1) $37,971 $43,820 (13.3)% Income from operations $19,624 $23,947 (18.1)% Income from continuing operations $3,802 $7,776 (51.1)% Earnings per share from continuing operations, basic $0.19 $0.38 (50.0)% Earnings per share from continuing operations, diluted $0.19 $0.37 (48.6)% (1) See Supplemental Financial Disclosure--Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures. Three Months Ended March 31, 2009 2008 % Change Selected Operating Data ( a ): Number of hospitals 7 7 Licensed beds ( c ) 509 449 Staffed and available beds ( d ) 462 433 Admissions ( e ) 7,052 7,855 (10.2)% Adjusted admissions ( f ) 10,556 10,817 (2.4)% Patient days ( g ) 28,075 29,039 (3.3)% Adjusted patient days ( h ) 42,117 40,247 4.6% Average length of stay (days) ( i ) 3.98 3.70 7.6% Occupancy ( j ) 67.5% 73.7% Inpatient catheterization procedures ( k ) 3,451 4,225 (18.3)% Inpatient surgical procedures ( l ) 2,087 2,120 (1.6)% Hospital net revenue $150,567 $144,778 4.0% Combined Operating Data ( b ): Number of hospitals 9 9 Licensed beds ( c ) 676 616 Staffed and available beds ( d ) 625 596 Admissions ( e ) 10,000 10,539 (5.1)% Adjusted admissions ( f ) 15,255 15,164 0.6% Patient days ( g ) 37,341 37,812 (1.2)% Adjusted patient days ( h ) 56,658 54,130 4.7% Average length of stay (days) ( i ) 3.73 3.59 3.9% Occupancy ( j ) 66.4% 69.7% 62.8% Inpatient catheterization procedures ( k ) 4,259 5,025 (15.2)% Inpatient surgical procedures ( l ) 2,720 2,754 (1.2)% Hospital net revenue $191,468 $186,045 2.9% Six Months Ended March 31, 2009 2008 % Change Selected Operating Data ( a ): Number of hospitals 7 7 Licensed beds ( c ) 509 449 Staffed and available beds ( d ) 462 433 Admissions ( e ) 13,814 15,005 (7.9)% Adjusted admissions ( f ) 20,436 20,645 (1.0)% Patient days ( g ) 53,208 54,499 (2.4)% Adjusted patient days ( h ) 79,028 75,381 4.8% Average length of stay (days) ( i ) 3.85 3.63 6.1% Occupancy ( j ) 63.3% 68.8% Inpatient catheterization procedures ( k ) 7,006 8,274 (15.3)% Inpatient surgical procedures ( l ) 4,087 4,069 0.4% Hospital net revenue $294,792 $281,929 4.6% Combined Operating Data ( b ): Number of hospitals 9 9 Licensed beds ( c ) 676 616 Staffed and available beds ( d ) 625 596 Admissions ( e ) 19,744 20,308 (2.8)% Adjusted admissions ( f ) 29,880 29,326 1.9% Patient days ( g ) 71,479 71,537 (0.1)% Adjusted patient days ( h ) 107,679 102,599 5.0% Average length of stay (days) ( i ) 3.62 3.52 2.8% Occupancy ( j ) 62.8% 65.6% Inpatient catheterization procedures ( k ) 8,647 9,801 (11.8)% Inpatient surgical procedures ( l ) 5,332 5,442 (2.0)% Hospital net revenue $376,491 $362,751 3.8% (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 consolidated financial statements for the three and six months ended March 31, 2009 and 2008. Three Months Six Months Ended March 31, Ended March 31, 2009 2008 2009 2008 (in thousands) (in thousands) Income from continuing operations $5,418 $5,486 $3,802 $7,776 Add: Income tax expense 3,372 3,099 2,463 5,448 Minority interest share of earnings of consolidated subsidiaries 4,639 4,642 7,415 8,779 Equity in net earnings of unconsolidated affiliates (2,714) (2,181) (4,779) (4,206) Interest and other income, net (73) (485) (173) (1,646) (Gain) loss on early extinguishment of debt (259) - 6,702 - Interest expense 1,338 3,864 4,194 7,796 Loss on disposal of property, equipment and other assets 91 138 164 166 Amortization 210 135 359 262 Depreciation 7,565 7,689 15,400 15,030 Pre-opening expenses 380 245 587 493 Share-based compensation expense 839 213 1,837 3,922 Adjusted EBITDA $20,806 $22,845 $37,971 $43,820
|SOURCE MedCath Corporation|
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