-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UCuaJcc6YeH8uZCEk+87diOKxmJiSdKHLfzF/nk+It1bXqm7lBi4VggrWmYTbmtA yP9UX1u+7HTGuI/wyotFSg== 0001169232-08-001235.txt : 20080305 0001169232-08-001235.hdr.sgml : 20080305 20080305140651 ACCESSION NUMBER: 0001169232-08-001235 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20080305 DATE AS OF CHANGE: 20080305 GROUP MEMBERS: DAVID NIERENBERG GROUP MEMBERS: NIERENBERG INVESTMENT MANAGEMENT OFFSHORE, INC. GROUP MEMBERS: THE D3 FAMILY BULLDOG FUND, L.P. GROUP MEMBERS: THE D3 FAMILY CANADIAN FUND, L.P. GROUP MEMBERS: THE D3 FAMILY FUND, L.P. GROUP MEMBERS: THE DIII OFFSHORE FUND, L.P. FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: NIERENBERG INVESTMENT MANAGEMENT CO CENTRAL INDEX KEY: 0001282683 IRS NUMBER: 911677205 FILING VALUES: FORM TYPE: SC 13D/A MAIL ADDRESS: STREET 1: 19605 NE 8TH ST CITY: CAMAS STATE: WA ZIP: 98607 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MEDCATH CORP CENTRAL INDEX KEY: 0001139463 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-GENERAL MEDICAL & SURGICAL HOSPITALS, NEC [8062] IRS NUMBER: 562248952 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-62451 FILM NUMBER: 08667254 BUSINESS ADDRESS: STREET 1: 10720 SIKES PLACE SUITE 300 CITY: CHARLOTTE STATE: NC ZIP: 28277 BUSINESS PHONE: 7047086600 MAIL ADDRESS: STREET 1: 10720 SIKES PLACE SUITE 300 CITY: CHARLOTTE STATE: NC ZIP: 28277 SC 13D/A 1 d73827_sc13d-a.txt AMENDMENT NO. 10 TO SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 10) MEDCATH CORPORATION (MDTH) (Name of Issuer) Common Stock (Title of Class of Securities) 58404W109 (CUSIP Number) David Nierenberg The D3 Family Funds 19605 NE 8th Street Camas, WA 98607 (360) 604-8600 With a copy to: Henry Lesser, Esq. DLA Piper US LLP 2000 University Avenue East Palo Alto, CA 94303 (650) 833-2000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 3, 2008 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D and is filing this schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box |_|. - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS The D3 Family Fund, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) |X| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (See Instructions) WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Washington - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 483,096 common shares (2.3%) --------------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 0 OWNED BY -------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 483,096 WITH -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON For the reporting person listed on this page, 483,096; for all reporting persons as a group, 2,934,511 shares (13.8%) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.8% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (See Instructions) PN - -------------------------------------------------------------------------------- 2 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS The DIII Offshore Fund, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) |X| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (See Instructions) WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Bahamas - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 558,166 common shares (2.6%) --------------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 0 OWNED BY -------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 558,166 WITH -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON For the reporting person listed on this page, 558,166; for all reporting persons as a group, 2,934,511 shares (13.8%) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.8% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (See Instructions) PN - -------------------------------------------------------------------------------- 3 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS The D3 Family Bulldog Fund, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) |X| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (See Instructions) WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Washington - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 1,798,863 common shares (8.5%) --------------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 0 OWNED BY -------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 1,798,863 WITH -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON For the reporting person listed on this page, 1,798,863; for all reporting persons as a group, 2,934,511 shares (13.8%) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.8% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (See Instructions) PN - -------------------------------------------------------------------------------- 4 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS The D3 Family Canadian Fund, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) |X| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (See Instructions) WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Washington - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 94,386 common shares (0.4%) --------------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 0 OWNED BY -------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 94,386 WITH -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON For the reporting person listed on this page, 94,386 shares; for all reporting persons as a group, 2,934,511 shares (13.8%) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.8% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (See Instructions) PN - -------------------------------------------------------------------------------- 5 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS Nierenberg Investment Management Company, Inc. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) |X| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (See Instructions) AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Washington - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 --------------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 2,934,511 common shares (13.8%) OWNED BY -------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 2,934,511 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON For the reporting person listed on this page, 2,934,511; for all reporting persons as a group, 2,934,511 shares (13.8%) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.8% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (See Instructions) CO - -------------------------------------------------------------------------------- 6 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS Nierenberg Investment Management Offshore, Inc. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) |X| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (See Instructions) AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Bahamas - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 --------------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 558,166 common shares (2.6%) OWNED BY -------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 558,166 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON For the reporting person listed on this page, 558,166; for all reporting persons as a group, 2,934,511 shares (13.8%) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.8% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (See Instructions) CO - -------------------------------------------------------------------------------- 7 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS David Nierenberg - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) |X| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (See Instructions) AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Washington - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 --------------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 2,934,511 common shares (13.8%) OWNED BY -------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 2,934,511 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON For the reporting person listed on this page, 2,934,511; for all reporting persons as a group, 2,934,511 shares (13.8%) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.8% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (See Instructions) IN - -------------------------------------------------------------------------------- 8 This Amendment No.10 to Schedule 13D (this "Amendment") amends the below-indicated items from the Schedule 13D previously filed by or on behalf of the undersigned parties (the "Reporting Persons"), as previously amended (the "Schedule 13D"), by supplementing such Items with the information below: Item 2. Identity and Background. David Nierenberg is hereby added as a Reporting Person; his business address is 19605 NE 8th Street, Camas WA 98607; his principal occupation is President of Nierenberg Investment Management Company, Inc. and Nierenberg Investment Management Offshore, Inc, two of the other Reporting Persons; during the past five years he has not been convicted in a criminal proceeding required to be reported in response to Item 2(d), or a party to a civil proceeding required to be reported in response to Item 2(e), of Schedule 13D ; and he is a citizen of the United States of America. Item 3. Source and Amount of Funds or Other Consideration. The total amount of funds used by the Reporting Persons to pay for the purchases of Shares reported in Item 5(c) was $3,196,747. The source of funds for purchases of Shares by each of the Reporting Persons is the working capital of the applicable Fund. Item 4. Purpose of Transaction. We have continued buying MedCath shares for investment because we believe that the shares are extremely undervalued. As set forth in our attached letter, we urge the Company's board to increase the current $59M repurchase program by an additional $100M and offer suggestions about how and why to do this. The previous statements by the Reporting Persons regarding their investment in MDTH (including those contained in the attached letter) represent solely their own analyses and judgments, based on publicly-available information and their own internal evaluation thereof. Those statements are not intended, and should not be relied on, as investment advice to any other investor or prospective investor. To the extent those statements reflect assessments of possible future developments, those assessments are inherently subject to the uncertainties associated with all assessments of future events; actual developments may materially differ as a result of circumstances affecting MDTH and/or extrinsic factors such as developments in the company's industry and the economic environment. The Reporting Persons reserve the right to change their internal evaluation of this investment in the future, as well as to increase or decrease their investment depending on their evaluation, and to discuss the company and their investment in it with the directors and executive officers of the company and third parties, without further amending the Schedule 13D except as required by applicable rules. 9 Item 5. Interest in Securities of the Issuer. (a, b) The Reporting Persons, in the aggregate, beneficially own 2,934,511 common shares, constituting approximately 13.8% of the outstanding Shares. This percentage is based on number of Shares reported as outstanding as of January 31, 2008 in the Company's Form 10-Q dated February 11, 2008. (c) During the past sixty (60) days the following purchases of Shares were made by the Reporting Persons in open market transactions:
Fund Transaction Date Shares Bought Price ---- ---------------- ------------- ----- D3 Family Fund, LP 01/03/2008 5,200 23.96 D3 Family Bulldog Fund, LP 01/03/2008 18,000 23.96 D3 Family Canadian Fund, LP 01/03/2008 1,035 23.96 D3 Family Bulldog Fund, LP 01/04/2008 25,100 23.64 D3 Family Canadian Fund, LP 01/04/2008 1,287 23.64 DIII Offshore Fund, LP 02/29/2008 7,900 20.77 D3 Family Fund, LP 03/03/2008 900 19.83 DIII Offshore Fund, LP 03/03/2008 91,200 19.83
Item 7. Material to be filed as Exhibits Exhibit 1 to this Schedule 13D is a letter to the Chairman of the Board, President and Chief Executive Officer, and Members of the Board of MedCath Corp. dated March 5, 2008. Exhibit 2 to this Schedule 13D is the Joint Filing Agreement among the Reporting Persons dated March 5, 2008 pursuant to which all of the Reporting Persons have authorized the filing of Schedule 13D's and amendments thereto as a group. 10 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, each of the undersigned certifies that the information set forth in the Statement is true, complete and correct. D3 Family Fund, L.P., D3 Family Bulldog Fund, and D3 Family Canadian Fund, L.P. By: Nierenberg Investment Management Company, Inc. Its: General Partner March 05, 2008 By: /s/ David Nierenberg - -------------------- ------------------------------------------- David Nierenberg, President DIII Offshore Fund, L.P. By: Nierenberg Investment Management Offshore, Inc. Its: General Partner March 05, 2008 By: /s/ David Nierenberg - -------------------- ------------------------------------------ David Nierenberg, President Nierenberg Investment Management Company, Inc. March 05, 2008 By: /s/ David Nierenberg - -------------------- ------------------------------------------- David Nierenberg, President Nierenberg Investment Management Offshore, Inc. March 05, 2008 By: /s/ David Nierenberg - -------------------- ------------------------------------------- David Nierenberg, President March 05, 2008 /s/ David Nierenberg - -------------------- ---------------------------------------------- David Nierenberg 11 EX-1 2 d73827_ex-1.txt LETTER TO THE CHAIRMAN OF THE BOARD EXHIBIT 1: THE D3 FAMILY FUNDS March 5, 2008 John T. Casey, Chairman of the Board O. Edwin French, President and Chief Executive Officer Members of the Board MedCath Corp. 10720 Sikes Place Charlotte, NC 28277 Dear John, Ed, and members of the Board: As your largest shareholders, which have been invested in MedCath for five years, we enthusiastically support your recent decision to invest up to $59M to repurchase the Company's shares. At the prices which you are paying to repurchase the shares, we believe that it is an excellent investment. Although MedCath has the strongest balance sheet and the best revenue and profit growth prospects of any American hospital company, the Company's enterprise value (equity market capitalization plus debt minus cash) relative to its EBITDA was only half that of its peer group on March 3. We suspect that the principal cause for this extreme valuation anomaly is recurring market paranoia about a possible legislative ban on physician referrals to hospitals in which they are investors. Since this paranoia seems to be distorting the market's judgment, we are writing you to make several suggestions about how MedCath might exploit the resulting under-valuation for the benefit of those of us who want to remain long term shareholders of the Company. We do not believe that the size of your repurchase program should be limited to only $59M. We do recognize that the $59M limit comes from the covenants of MedCath's existing debt. But it is our judgment that the Company can pay off that debt later this year, thereby removing the $59M cap on the size of your repurchase program. Once you do that, we would urge you to authorize the Company to repurchase another $100M of MedCath shares, provided this can be done at bargain prices. We also would like to suggest a way to fund the debt pay-off and the $100M follow-on share repurchase which we believe would not impair MedCath's ability to outgrow its rivals organically or via acquisition(s) of hospitals. We suggest that MedCath do a master sale - leaseback of virtually all of its hospital land and buildings, taking full advantage of the following circumstances which we do not believe are reflected in MedCath's current book value for these assets: cap rates today are still relatively attractive; MedCath's hospitals rank first or second in cardiac market share in all of its markets; we believe that all of your hospitals are profitable; most of your hospitals are located in Sun Belt or Western markets which have attractive demographic growth; your buildings are relatively new; and we believe that your land-holdings have appreciated significantly in value. We therefore believe that the proceeds from such a sale - - leaseback, combined with MedCath's existing cash, could pay off the debt whose covenants limit 12 the Company's repurchase program, and fund the repurchase of an additional $100M of shares, while leaving the corporate balance sheet sufficiently liquid and unencumbered to pursue any reasonable growth opportunities. We would like to conclude with an observation about the market paranoia referenced earlier. After five years of being loyal, supportive MedCath stockholders, we must admit that we have become tired of this recurring political bogeyman about banning physician ownership. It doesn't seem to matter which party controls the Congress or who chairs the relevant committees - the American Hospital Association and its friends on Capitol Hill do not let go of their crusade. Worries about this issue periodically crush MedCath's share price, artificially exacerbating its volatility, and raising MedCath's cost of capital. You know and we know that there are elements of unreal political theatre about this; the claims made by AHA and its allies do not comport with economic reality. Perhaps this should not surprise, for as former Senator Alan Simpson said, "Those who travel the high road in Washington need not fear heavy traffic." We all know that many AHA hospitals partner with their physicians whenever they believe it is advantageous to do so. Certainly the not-for-profit hospital of which I am Vice Chair does so. Why is it acceptable for a not-for-profit to do this but objectionable when a for-profit does? Because the for-profits are better competitors. We know that the principal reason physicians refer cases to, and practice in, MedCath hospitals is not because they are investors in the hospitals. Rather, it is because, unlike most community hospitals, MedCath's hospitals are designed, operated, and governed to maximize physician productivity. Productive time is the only asset doctors can sell. We therefore do not doubt that, even if Congress were to ban physician investment, doctors would still prefer practicing in MedCath's hospitals. MedCath may have been too oppositional to Congressional efforts to change the rules of the game. Maybe this year, instead, you should find the best way to resolve your differences, to finally put this largely shadow-boxing issue behind you, once and for all. Wouldn't it be better if all MedCath management's time, and all the Company's money, were focused, not on constant lobbying, but on building the intrinsic value of MedCath's business? Wouldn't it be terrific if you could put an end to this recurring political paranoia and bear raids on the stock? If you finally could reach closure on this issue, we believe MedCath's valuation could double to eight times cash flow instead of four. (And with your excellent growth opportunities, the share price could climb much further.) But, until then, we urge you to repurchase as many shares as you prudently can! Carpe diem. Thanks for considering our views, Sincerely yours, David Nierenberg Nierenberg Investment Management Company, Inc. 19605 NE 8th Street, Camas, Washington 98607 (360) 604-8600 EX-2 3 d73827_ex-2.txt JOINT FILING AGREEMENT (RESTATED) EXHIBIT 2: JOINT FILING AGREEMENT (RESTATED) WHEREAS, the undersigned (collectively, the "Reporting Persons") from time to time make filings with the Securities and Exchange Commission pursuant to Regulation 13D-G under the Securities Exchange Act of 1934, as amended; and WHEREAS, the Reporting Persons prefer to make joint filings on behalf of all Reporting Persons rather than individual filings on behalf of each of the Reporting Persons; NOW, THEREFORE, the undersigned hereby agree as follows with each of the other Reporting Persons: 1. Each of the Reporting Persons is individually eligible to make joint filings. 2. Each of the Reporting Persons is responsible for timely making joint filings and any amendments thereto. 3. Each of the Reporting Persons is responsible for the completeness and accuracy of the information concerning such person contained in joint filings. 4. None of the Reporting Persons is responsible for the completeness or accuracy of the information concerning the other Reporting Persons contained in joint filings, unless such person knows or has reason to believe that such information is inaccurate. 5. This Joint Filing Agreement amends, restates and supersedes the Joint Filing Agreement (Restated) dated August 3, 2007 by and among certain of the undersigned, but only as to those filings to be made by all Reporting Persons. 13 6. The undersigned agree that each joint filing made on or after the date hereof will be, and any amendment thereto will be, made on behalf of each of the Reporting Persons. D3 Family Fund, L.P., D3 Bulldog Fund, L.P. and D3 Family Canadian Fund, L.P. By: Nierenberg Investment Management Company, Inc. Its: General Partner March 5, 2008 By: ------------------------------------ David Nierenberg, President DIII Offshore Fund, L.P. By: Nierenberg Investment Management Offshore, Inc. Its: General Partner March 5, 2008 By: ------------------------------------ David Nierenberg, President Nierenberg Investment Management Company, Inc. March 5, 2008 By: ------------------------------------ David Nierenberg, President Nierenberg Investment Management Offshore, Inc. March 5, 2008 By: ------------------------------------ David Nierenberg, President -----END PRIVACY-ENHANCED MESSAGE-----