MedCath Corporation Reports First Quarter Earnings
CHARLOTTE, N.C., Feb 3 /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 unaudited operating results for its first quarter of fiscal 2010, which ended December 31, 2009.
First Quarter 2010 Highlights
- Same facility hospital admissions and outpatient cases were up 2.0% and 5.8%, respectively, for the first quarter of fiscal 2010 compared to the same period of the prior year.
- Same facility hospital non-cardiovascular admissions increased 17% for the first quarter of 2010 compared to the same period of the prior year.
- Same facility hospital emergency department visits increased 14.7% in the first quarter of fiscal 2010 compared to the same period of the prior year.
References in this release to same facility results exclude the impact of Hualapai Mountain Medical Center (“HMMC”), our newest hospital located in Kingman, Arizona, for the first quarter of fiscal 2010, its first quarter of operations.
First Quarter 2010 Results
MedCath’s net revenue for the first quarter of fiscal 2010 decreased 2.0% to $147.3 million from $150.2 million in the first quarter of fiscal 2009. Contributing to the revenue decline was lower cases and net revenue related to cardiovascular services, primarily heart surgeries, offset by revenue from MedCath’s newest hospital and revenue growth in non-cardiovascular cases at several recently expanded hospitals. During the quarter, non-cardiovascular inpatient net revenue represented 25% of net inpatient revenue, compared to 17% in the first quarter of 2009. Loss from continuing operations, net of taxes was $(2.5) million, or $(0.13) per diluted share compared to $(1.9) million, or $(0.10) per diluted share, for the same period of the prior year. Adjusted EBITDA decreased to $7.8 million for the first quarter of fiscal 2010 from $16.1 million in the same period of the prior year.
Same Facility First Quarter 2010 Results
Same facility net revenue decreased 5.0% from $150.2 million to $142.7 million for the first quarter of fiscal 2010 compared to the same period of the prior year. Same facility loss from continuing operations, net of taxes was $(0.2) million, or $(0.01) per diluted share, compared to a loss from continuing operations, net of taxes of $(1.9) million in the first quarter of fiscal 2009, or $(0.10) per diluted share. Same facility Adjusted EBITDA was $10.1 million for the first quarter of fiscal 2010.
“The significant increase we experienced this quarter in our non-cardiovascular related net patient revenue is indicative that expansion at several of our hospitals is providing benefit to the communities we serve as well as to our Company,” said Ed French, MedCath’s President and Chief Executive Officer. “Although we are disappointed with our core cardiovascular net patient revenue this quarter, we are encouraged by our overall increase in admissions and outpatient cases.”
Adjusted EBITDA excludes share-based compensation and pre-opening expenses, but these items are included as a component of loss from continuing operations. Share-based compensation expense totaled $0.6 million in the first quarter of fiscal 2010, or $0.02 per diluted share, compared to $1.0 million, or $0.03 per diluted share, in the first quarter of fiscal 2009. Pre-opening expenses related to the development of HMMC totaled $0.9 million, or $0.02 per diluted share, in the first quarter of fiscal 2010, compared to $0.2 million, or $0.01 per diluted share, in the first quarter of fiscal 2009.
HMMC contributed $4.6 million to net revenue, $(3.2) million to EBITDA, which includes $0.9 million of pre-opening expenses, and $(2.3) million to loss from continuing operations, net of taxes, or $(0.12) per diluted share.
First Quarter Operating Statistics, Cash Flow and Capital Expenditures
Same facility hospital admissions in the first quarter of fiscal 2010 were 6,938, up 2.0% compared to the first quarter of fiscal 2009. Adjusted admissions totaled 10,043, up 1.7% compared with the first quarter of fiscal 2009. Same facility hospital outpatient cases totaled 16,671 in the first quarter of fiscal 2010, up 5.8% compared to the first quarter of fiscal 2009.
Total same facility uncompensated care, which includes charity care plus bad debt expense, equaled 9.6% of same facility hospital division net patient revenue before the deduction for charity care in the first quarter of fiscal 2010 versus 8.5% for the first quarter of fiscal 2009.
Net cash provided by operating activities of continuing operations for the first quarter of fiscal 2010 was $3.9 million, down from $18.9 million in the first quarter of fiscal 2009. Cash provided by operating activities for the first quarter of fiscal 2010 includes $7.3 million cash used by HMMC, MedCath’s newest hospital. Cash paid for capital expenditures during the first quarter of fiscal 2010 totaled $9.3 million, which included $4.5 million related to maintenance expenditures and $4.8 million related to MedCath’s construction projects. As of the first quarter of fiscal 2010, MedCath’s balance sheet included cash and cash equivalents of $22.8 million, total debt and capitalized leases of $122.2 million and total assets of $558.1 million.
Use of Non-GAAP Financial Measures
Included in the press release are certain financial measures that are not generally accepted accounting principles (“non-GAAP”), such as adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”); and adjusted diluted (loss) earnings per share from continuing operations (“Adjusted EPS”). Adjusted EBITDA represents MedCath’s loss from continuing operations, net of taxes before interest expense; loss on early extinguishment of debt; income tax benefit; depreciation; amortization; share-based compensation expense; loss on disposal of property, equipment and other assets; interest and other income; equity in net earnings of unconsolidated affiliates; net income attributable to noncontrolling interest; and pre-opening expense. Adjusted EPS represents MedCath’s diluted loss per share from continuing operations for the three months ended December 31, 2009 adjusted for share-based compensation expense and pre-opening expense. MedCath’s management uses Adjusted EBITDA to measure the performance of MedCath’s various operating entities, to compare actual results to historical and budgeted results, and to make capital allocation decisions. Further, management believes that many investors in MedCath also invest in, or have knowledge of, other healthcare companies that use Adjusted EBITDA and Adjusted EPS as a financial performance measure.
Because Adjusted EBITDA and Adjusted EPS are non-GAAP measures, Adjusted EBITDA and Adjusted EPS, 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 and Adjusted EPS to diluted EPS from continuing operations.
Same facility non-GAAP measures are also computed as defined above with the exception that they exclude the impact of Hualapai Mountain Medical Center.
Management will discuss and answer questions regarding MedCath’s quarterly results on Thursday, February 4, 2010, during a 10 a.m. EST 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 52092862. A live web cast will also be available on MedCath’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. EST, February 18, 2010. To access the replay, domestic callers should dial (800) 642-1687 and international callers should dial (706) 645-9291. The archived conference ID is 52092862. 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 ten hospitals with a total of 825 licensed beds, located in Arizona, Arkansas, California, Louisiana, New Mexico, South Dakota, and Texas. 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 first 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, 2009 filed with the Securities and Exchange Commission on December 15, 2009. Copies of our filings with the Securities and Exchange Commission, including exhibits, are available at http://www.sec.gov.
MEDCATH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended December 31,
-------------------------------
2009 2008
---- ----
Net revenue $147,260 $150,245
Operating expenses:
Personnel expense 51,821 50,169
Medical supplies expense 41,859 41,642
Bad debt expense 11,925 11,429
Other operating expenses 34,452 31,902
Pre-opening expenses 866 207
Depreciation 9,035 7,801
Amortization 8 30
Loss on disposal of property,
equipment and other assets 137 73
--- --
Total operating expenses 150,103 143,253
------- -------
(Loss) income from operations (2,843) 6,992
Other income (expenses):
Interest expense (1,813) (2,857)
Loss on early extinguishment of debt - (6,961)
Interest and other income 74 101
Equity in net earnings of
unconsolidated affiliates 1,516 2,065
----- -----
Total other income (expense), net (223) (7,652)
---- ------
Loss from continuing operations before
income taxes (3,066) (660)
Income tax benefit (1,539) (1,108)
------ ------
(Loss) income from continuing operations (1,527) 448
(Loss) income from discontinued
operations, net of taxes (288) 4,921
---- -----
Net (loss) income (1,815) 5,369
Less: Net income attributable to
noncontrolling interest (841) (3,123)
---- ------
Net (loss) income attributable to
MedCath Corporation $(2,656) $2,246
======= ======
Amounts attributable to MedCath
Corporation common stockholders:
Loss from continuing operations, net
of taxes $(2,511) $(1,915)
(Loss) income from discontinued
operations, net of taxes (145) 4,161
---- -----
Net (loss) income $(2,656) $2,246
======= ======
(Loss) earnings per share, basic
Income from continuing operations
attributable to MedCath Corporation
common stockholders $(0.13) $(0.10)
Income (loss) from discontinued
operations attributable to MedCath
Corporation common stockholders - 0.21
--- ----
(Loss) earnings per share, basic $(0.13) $0.11
------ -----
(Loss) earnings per share, diluted
Income from continuing operations
attributable to MedCath Corporation
common stockholders $(0.13) $(0.10)
Income (loss) from discontinued
operations attributable to MedCath
Corporation common stockholders - 0.21
--- ----
(Loss) earnings per share, diluted $(0.13) $0.11
------ -----
Weighted average number of shares,
basic 19,743 19,599
Dilutive effect of stock options and
restricted stock - -
--- ---
Weighted average number of shares,
diluted 19,743 19,599
====== ======
MEDCATH CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, September 30,
2009 2009
---- ----
(Unaudited)
Current assets:
Cash and cash equivalents $22,760 $32,014
Accounts receivable, net 72,596 70,410
Income tax receivable 1,037 -
Medical supplies 18,929 18,261
Deferred income tax assets 12,069 12,201
Prepaid expenses and other current assets 15,313 13,969
Current assets of discontinued operations 11,942 30,011
------ ------
Total current assets 154,646 176,866
Property and equipment, net 383,850 385,926
Investments in affiliates 7,931 14,055
Other intangible assets, net 327 378
Other assets 11,331 13,223
------ ------
Total assets $558,085 $590,448
======== ========
Current liabilities:
Accounts payable $39,562 $40,979
Income tax payable - 642
Accrued compensation and benefits 16,136 18,744
Other accrued liabilities 20,975 24,860
Current portion of long-term debt and
obligations under capital leases 18,279 21,243
Current liabilities of discontinued
operations 9,907 10,165
----- ------
Total current liabilities 104,859 116,633
Long-term debt 99,058 101,871
Obligations under capital leases 4,861 4,647
Deferred income tax liabilities 14,069 13,874
Other long-term obligations 7,436 8,893
----- -----
Total liabilities 230,283 245,918
Noncontrolling interests - redeemable 4,297 7,448
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;
21,654,768 issued and 20,511,874
outstanding at December 31, 2009;
21,595,880 issued and 20,150,556
outstanding at September 30, 2009 216 216
Paid-in capital 455,273 455,259
Accumulated deficit (94,076) (91,420)
Accumulated other comprehensive loss (304) (360)
Treasury stock, at cost;
1,084,006 shares at December 31, 2009
1,445,324 shares at September 30, 2009 (44,797) (44,797)
------- -------
Total MedCath Corporation stockholders'
equity 316,312 318,898
Noncontrolling interest 7,193 18,184
----- ------
Total equity 323,505 337,082
------- -------
Total liabilities and equity $558,085 $590,448
======== ========
MEDCATH CORPORATION
SELECTED OPERATING DATA
(In thousands, except per share data and selected operating data)
(Unaudited)
Three Months Ended December 31,
------------------------------
2009 2008 % Change
---- ---- --------
Statement of Operations Data:
Net revenue $147,260 $150,245 (2.0)%
Adjusted EBITDA (1) $7,811 $16,101 (51.5)%
(Loss) income from operations $(2,843) $6,992 (140.7)%
Loss from continuing operations,
net of taxes $(2,511) $(1,915) (31.1)%
Loss per share from continuing
operations, basic $(0.13) $(0.10) (30.0)%
Loss per share from continuing
operations, diluted $(0.13) $(0.10) (30.0)%
(1) See Supplemental Financial Disclosure--Reconciliation of GAAP
Financial Measures to Non-GAAP Financial Measures.
Three Months Ended December 31,
-------------------------------
2009
Same
2009 2008 % Change Facility % Change
---- ---- -------- --------- --------
Selected Operating Data (a):
Number of hospitals 8 7 7
Licensed beds ( c ) 658 509 588
Staffed and available
beds ( d ) 572 463 502
Admissions ( e ) 7,163 6,801 5.3% 6,938 2.0%
Adjusted admissions ( f ) 10,497 9,874 6.3% 10,043 1.7%
Patient days ( g ) 26,352 25,181 4.7% 25,423 1.0%
Adjusted patient days ( h ) 39,336 37,044 6.2% 37,526 1.3%
Average length of stay
(days) ( i ) 3.68 3.70 (0.5)% 3.66 (1.1)%
Occupancy ( j ) 50.1% 59.1% 55.0%
Inpatient catheterization
procedures ( k ) 3,307 3,552 (6.9)% 3,265 (8.1)%
Inpatient surgical
procedures ( l ) 1,949 2,001 (2.6)% 1,909 (4.6)%
Hospital net revenue $142,346 $144,225 (1.3)% $137,753 (4.5)%
Combined Operating Data (b):
Number of hospitals 10 9 9
Licensed beds ( c ) 825 676 755
Staffed and available
beds ( d ) 735 628 665
Admissions ( e ) 9,645 9,807 (1.7)% 9,420 (3.9)%
Adjusted admissions ( f ) 14,626 14,622 0.0% 14,172 (3.1)%
Patient days ( g ) 34,167 34,189 (0.1)% 33,238 (2.8)%
Adjusted patient days ( h ) 52,205 51,162 2.0% 50,395 (1.5)%
Average length of stay
(days) ( i ) 3.54 3.49 1.4% 3.53 1.1%
Occupancy ( j ) 50.5% 59.2% 54.3%
Inpatient catheterization
procedures ( k ) 3,997 4,385 (8.8)% 3,955 (9.8)%
Inpatient surgical
procedures ( l ) 2,490 2,622 (5.0)% 2,450 (6.6)%
Hospital net revenue $182,340 $185,023 (1.5)% $177,747 (3.9)%
(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. Same facility for the three months ended December 31,
2009 exclude the results of Hualapai Mountain Medical Center
(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
(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 the loss from continuing operations, net
of taxes attributable to MedCath Corporation's common stockholders as
derived directly from MedCath Corporation's consolidated financial
statements to Adjusted EBITDA for the three months ended December 31,
2009 and 2008.
Three Months Ended December 31,
------------------------------
2009 2008
---- ----
(in thousands)
Loss from continuing operations, net of taxes $(2,511) $(1,915)
Add:
Income tax benefit (1,539) (1,108)
Net income attributable to noncontrolling
interest 984 2,363
Equity in net earnings of unconsolidated
affiliates (1,516) (2,065)
Interest and other income (74) (101)
Loss on early extinguishment of debt - 6,961
Interest expense 1,813 2,857
Loss on disposal of property, equipment and
other assets 137 73
Amortization 8 30
Depreciation 9,035 7,801
Pre-opening expenses 866 207
Share-based compensation expense 608 998
--- ---
Adjusted EBITDA $7,811 $16,101
====== =======
The following table reconciles MedCath Corporation's diluted loss per
share from continuing operations, net of taxes attributable to MedCath
Corporations common stockholders as derived directly from MedCath's
consolidated financial statements to Adjusted diluted (loss) earnings
per share from continuing operations for the three months ended
December 31, 2009 and 2008.
Three Months Ended December 31,
-------------------------------
2009 2008
---- ----
Diluted loss per share $(0.13) $(0.10)
Add:
Loss on debt refinancing - 0.22
Share-based compensation expense 0.02 0.03
Pre-opening expense 0.02 0.01
---- ----
Adjusted diluted (loss) earnings per share ($0.09) $0.16
====== =====
The following table reflects the calculation of adjusted free cash flow
and adjusted free cash flow per diluted share. Free Cash Flows is
commonly defined as cash flows from continuing operations less capital
expenditures.
Three Months Ended December 31,
------------------------------
2009 2008
---- ----
(in thousands)
Cash flow from continuing operations $3,878 $18,854
Less: Non-expansion capital expenditures 4,530 6,320
----- -----
Free cash flow $(652) $12,534
===== =======
SOURCE MedCath Corporation
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