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

	Three Months Ended December 31,
	2004			2003
Net revenue	$	184,760		$	155,123
Operating expenses:
Personnel expense		57,213			47,012
Medical supplies expense		52,486			41,977
Bad debt expense		11,484			13,788
Other operating expenses		38,400			31,520
Pre-opening expenses		—			3,016
Depreciation		9,736			9,723
Amortization		290			290
(Gain)/loss on disposal of property, equipment and other assets		3			(84	)
Total operating expenses		169,612			147,242
Income from operations		15,148			7,881
Other income (expenses):
Interest expense		(7,998	)		(6,320	)
Interest income		390			231
Other income, net		5			4
Equity in net earnings of unconsolidated affiliates		769			577
Total other expenses, net		(6,834	)		(5,508	)
Income from continuing operations before minority interest, income taxes and discontinued operations		8,314			2,373
Minority interest share of earnings of consolidated subsidiaries		(3,999	)		(1,091	)
Income from continuing operations before income taxes and discontinued operations		4,315			1,282
Income tax expense		1,723			517
Income from continuing operations		2,592			765
Income (loss) from discontinued operations, net of taxes		1,948			(1,698	)
Net income (loss)	$	4,540		$	(933	)
Earnings (loss) per share, basic
Continuing operations	$	0.14		$	0.04
Discontinued operations		0.11			(0.09	)
Earnings (loss) per share, basic	$	0.25		$	(0.05	)
Earnings (loss) per share, diluted
Continuing operations	$	0.14		$	0.04
Discontinued operations		0.10			(0.09	)
Earnings (loss) per share, diluted	$	0.24		$	(0.05	)
Weighted average number of shares, basic		18,045			17,949
Dilutive effect of stock options		932			—
Weighted average number of shares, diluted		18,977			17,949

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

	Three Months Ended December 31,
	2004		2003		% Change
Statement of Operations Data:
Net revenue	$	184,760	$	155,123		19.1	%
Adjusted EBITDA (1)	$	25,177	$	17,810		41.4	%
Income from operations	$	15,148	$	7,881		92.2	%
Income from continuing operations	$	2,592	$	765		238.8	%
Earnings per share from continuing operations, basic	$	0.14	$	0.04		237.0	%
Earnings per share from continuing operations, diluted	$	0.14	$	0.04		220.5	%

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

	Three Months Ended December 31,
	2004			2003			% Change
Selected Operating Data (consolidated) (a):
Number of hospitals		11			10
Licensed beds (b)		672			580
Staffed and available beds (c)		631			524
Admissions (d)		10,891			9,588			13.6	%
Adjusted admissions (e)		14,293			12,093			18.2	%
Patient days (f)		37,158			34,088			9.0	%
Adjusted patient days (g)		48,393			42,944			12.7	%
Average length of stay (days) (h)		3.41			3.56			(4.2	)%
Occupancy (i)		64.0	%		70.7	%
Inpatient catheterization procedures		5,808			4,654			24.8	%
Inpatient surgical procedures		2,775			2,322			19.5	%
Hospital division revenue	$	171,229		$	139,930			22.4	%

	Three Months Ended December 31,
	2004			2003			% Change
Selected Operating Data (same facility):
Number of hospitals		9			9
Licensed beds (b)		580			580
Staffed and available beds (c)		547			524
Admissions (d)		9,874			9,588			3.0	%
Adjusted admissions (e)		13,129			12,093			8.6	%
Patient days (f)		33,344			34,088			(2.2	)%
Adjusted patient days (g)		44,049			42,944			2.6	%
Average length of stay (days) (h)		3.38			3.56			(5.1	)%
Occupancy (i)		66.3	%		70.7	%
Inpatient catheterization procedures		5,100			4,654			9.6	%
Inpatient surgical procedures		2,531			2,322			9.0	%
Hospital division revenue	$	153,069		$	139,930			9.4	%

(a)	Selected operating data includes consolidated hospitals in operation as of the end of the period but does not include hospitals which were accounted for using the equity method in our consolidated financial statements.
(b)	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.
(c)	Staffed and available beds represent the number of beds that are readily available for patient use at the end of the period.
(d)	Admissions represent the number of patients admitted for inpatient treatment.
(e)	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.
(f)	Patient days represent the total number of days of care provided to inpatients.
(g)	Adjusted patient days is a general measure of combined inpatient and outpatient days. We computed adjusted patient days by dividing gross patient revenue by gross inpatient revenue and then multiplying the quotient by patient days.
(h)	Average length of stay (days) represents the average number of days inpatients stay in our hospital.
(i)	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.

MEDCATH CORPORATION
SUPPLEMENTAL FINANCIAL DISCLOSURE — RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO 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 months ended December 31, 2004 and 2003.

	Three Months Ended December 31,
	2004			2003
	(in thousands)
Income from continuing operations	$	2,592		$	765
Add:
Income tax expense		1,723			517
Minority interest share of earnings of consolidated subsidiaries		3,999			1,091
Equity in net earnings of unconsolidated affiliates		(769	)		(577	)
Other income, net		(5	)		(4	)
Interest income		(390	)		(231	)
Interest expense		7,998			6,320
(Gain)/loss on disposal of property, equipment and other assets		3			(84	)
Amortization		290			290
Depreciation		9,736			9,723
Adjusted EBITDA	$	25,177		$	17,810