8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Date of Report (Date of earliest event reported): August 4, 2005

MEDCATH CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	000-33009	56-2248952
(State or other jurisdiction of	(Commission File Number)	(IRS Employer Identification No.)
incorporation or organization)

10720 Sikes Place
Charlotte, North Carolina 28277
(Address of principal executive offices, including zip code)

(704) 708-6600
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13d-4(c))

Item 2.02. Results of Operations and Financial Condition

On August 4, 2005, MedCath Corporation (“MedCath” or the “Company”) issued a press release announcing the Company’s results of operations for the fiscal quarter ended June 30, 2005. A copy of the press release and financial update are furnished as Exhibits 99.1 and 99.2.

Item 9.01 Financial Statements and Exhibits

Exhibit 99.1      Press Release dated August 4, 2005
Exhibit 99.2      Financial Update dated August 4, 2005

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MEDCATH CORPORATION
Date: August 4, 2005	By:	/s/James E. Harris
		James E. Harris Executive Vice President and Chief Financial Officer

Page 2

EX-99.1

Exhibit 99.1

MEDCATH CONTACTS:
John T. Casey	James E. Harris
Chairman and Chief Executive Officer	Chief Financial Officer
(704) 708-6600	(704) 708-6600

MEDCATH CORPORATION REPORTS THIRD QUARTER EARNINGS

     CHARLOTTE, N.C., Aug 4, 2005 – MedCath Corporation (Nasdaq: MDTH), a healthcare provider focused on the diagnosis and treatment of cardiovascular disease, today announced its operating results for its third quarter ended June 30, 2005.

     Third quarter highlights:

• Net revenue increased 10.8%

• Hospital division net revenue increased 11.4%

• Same facility adjusted admissions increased 9.1%

• Income from continuing operations per diluted share of $0.17, up from $0.13 in the third quarter of fiscal 2004

Third Quarter 2005 Results

     MedCath’s net revenue increased 10.8% to $195.1 million in the third quarter of fiscal 2005 from $176.2 million in the third quarter of fiscal 2004. Income from operations was $16.5 million in the third quarter of fiscal 2005, compared to income from operations of $12.2 million in the third quarter of fiscal 2004. Adjusted EBITDA increased 12.9% to $26.5 million from $23.5 million and income from continuing operations was $3.4 million, or $0.17 per diluted share, in the third quarter of fiscal 2005, compared to income from continuing operations of $2.5 million, or $0.13 per diluted share, in the third quarter of fiscal 2004.

     Net income for the quarter, including the results of The Heart Hospital of Milwaukee, which is accounted for as discontinued operations, totaled $2.7 million, or $0.14 per diluted share compared to net income of $1.4 million, or $0.07 per share in the third quarter of fiscal 2004.

     “We experienced solid net revenue gains during the quarter, primarily driven by an overall increase in patient volumes,” said John T. Casey, MedCath’s chairman and chief executive officer. “While we also experienced strong growth in our Adjusted EBITDA, our results were negatively impacted by an increase in our bad debt expense that resulted from an overall rise in the number of self-pay patient visits in several of our markets.”

     During the quarter, revenue from self-pay patients, the primary source of bad debt expense, represented 7.4% of net revenue. In comparison, revenue from self-pay patients represented 5.5% of net revenue in the third quarter of fiscal 2004. The increase in self-pay revenue resulted in bad debt expense equaling 7.6% of net revenue in the third quarter of fiscal 2005 versus 5.4% in the third quarter of fiscal 2004.

     “Also impacting our financial results this quarter were lower than anticipated volumes at our Louisiana Heart Hospital,” Casey said. “We have begun implementing strategic initiatives intended to improve this hospital’s operating performance. We remain optimistic about the hospital’s long-term potential.”

Operating Statistics, Cash Flow and Income Taxes

     Total and same facility hospital admissions for the third quarter of fiscal 2005 increased 5.3% and adjusted admissions rose 9.1% from the third quarter of the previous fiscal year. MedCath experienced increases in both inpatient catheterization and inpatient surgical procedures of 4.6% and 12.5% respectively, which contributed to an 11.4% net revenue increase in the hospital division during the quarter versus the prior year. Beginning with the third quarter of fiscal 2005, Heart Hospital of Lafayette and Texsan Heart Hospital, which both opened during the second quarter of fiscal 2004, began to be reported as same facility hospitals. As such, consolidated hospital division and same facility hospital division results are identical for the third quarter’s operating statistics and financial comparisons included in this release.

     Net cash provided by operating activities of continuing operations for the third quarter of fiscal 2005 was $19.5 million. Capital expenditures totaled $3.4 million for the quarter. As of June 30, 2005 cash and cash equivalents totaled $142.1 million, and long-term debt and leases, including current portion, equaled $357.2 million.

     During the third quarter, MedCath increased its annual effective tax rate to 41.0% resulting in an effective rate of 42.9% for the quarter. The increase in the overall effective rate is based on the impact of certain non-deductible items and other adjustments.

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; taxes; depreciation; amortization; gain or loss on disposal of property, equipment and other assets; interest and other income, net; equity in net earnings of unconsolidated affiliates; and minority interest. 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 analysis 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 accompany 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 today 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 “MedCath.” 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, Aug. 11, 2005. To access the replay, domestic callers should dial (800) 642-1687 and international callers should dial (706) 645-9291. The archived conference ID is 7160923. 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., develops, owns and operates hospitals in partnership with physicians, most of whom are cardiologists and cardiovascular surgeons. While each of its hospitals is licensed as a general acute care hospital, MedCath focuses on serving the unique needs of patients suffering from cardiovascular disease. Together with its physician partners who own equity interests in them, MedCath owns and operates 12 hospitals with a total of 727 licensed beds, located in Arizona, Arkansas, California, Louisiana, New Mexico, Ohio, South Dakota and Texas. In addition to its hospitals, MedCath provides cardiovascular care services in diagnostic and therapeutic facilities located in various states and through mobile cardiac catheterization laboratories. MedCath also provides consulting and management services tailored to cardiologists and cardiovascular surgeons.

# # #

     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 Exhibit 99.1 to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on

December 14, 2004. A copy of this report, including exhibits, is available on the Internet site of the Commission at http://www.sec.gov. These risks and uncertainties include, among others, the impact of proposed legislation to extend the provisions of the Medicare Prescription Drug Improvement Act of 2003 and other healthcare reform initiatives, possible reductions or changes in reimbursements from government or third party payors that would decrease our revenue, greater than anticipated losses at new hospitals during the ramp up period, a negative finding by a regulatory organization with oversight of one of our hospitals, and changes in medical or other technology and reimbursement rates for new technologies.

EX-99.2

Exhibit 99.2

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

	Three Months Ended June 30,						Nine Months Ended June 30,
	2005			2004			2005			2004
Net revenue	$	195,116		$	176,165		$	571,890		$	499,968
Operating expenses:
Personnel expense		58,663			54,818			175,278			154,245
Medical supplies expense		55,838			50,983			163,888			138,940
Bad debt expense		14,814			9,556			38,245			32,819
Other operating expenses		39,313			37,353			115,218			105,468
Pre-opening expenses		—			—			—			5,103
Depreciation		9,517			10,921			28,684			31,074
Amortization		290			290			870			870
Loss (gain) on disposal of property, equipment and other assets		171			24			245			(27	)
Total operating expenses		178,606			163,945			522,428			468,492
Income from operations		16,510			12,220			49,462			31,476
Other income (expenses):
Interest expense		(8,454	)		(6,863	)		(24,227	)		(19,925	)
Interest and other income, net		887			218			1,903			614
Equity in net earnings of unconsolidated affiliates		899			900			2,554			2,624
Total other expenses, net		(6,668	)		(5,745	)		(19,770	)		(16,687	)
Income from continuing operations before minority interest, income taxes and discontinued operations		9,842			6,475			29,692			14,789
Minority interest share of earnings of consolidated subsidiaries		(3,956	)		(2,852	)		(12,357	)		(3,878	)
Income from continuing operations before income taxes and discontinued operations		5,886			3,623			17,335			10,911
Income tax expense		2,528			1,169			7,107			3,978
Income from continuing operations		3,358			2,454			10,228			6,933
Income (loss) from discontinued operations, net of taxes		(609	)		(1,074	)		864			(3,845	)
Net income	$	2,749		$	1,380		$	11,092		$	3,088
Earnings (loss) per share, basic
Continuing operations	$	0.18		$	0.14		$	0.56		$	0.38
Discontinued operations		(0.03	)		(0.06	)		0.05			(0.21	)
Earnings per share, basic	$	0.15		$	0.08		$	0.61		$	0.17
Earnings (loss) per share, diluted
Continuing operations	$	0.17		$	0.13		$	0.53		$	0.38
Discontinued operations		(0.03	)		(0.06	)		0.04			(0.21	)
Earnings per share, diluted	$	0.14		$	0.07		$	0.57			0.17
Weighted average number of shares, basic		18,425			17,990			18,216			17,974
Dilutive effect of stock options		1,248			826			1,193			482
Weighted average number of shares, diluted		19,673			18,816			19,409			18,456

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

	Three Months Ended June 30,									Nine Months Ended June 30,
	2005			2004			% Change			2005			2004			% Change
Statement of Operations Data:
Net revenue	$	195,116		$	176,165			10.8	%	$	571,890		$	499,968			14.4	%
Adjusted EBITDA (1)	$	26,488		$	23,455			12.9	%	$	79,261		$	63,393			25.0	%
Income from operations	$	16,510		$	12,220			35.1	%	$	49,462		$	31,476			57.1	%
Income from continuing operations	$	3,358		$	2,454			36.8	%	$	10,228		$	6,933			47.5	%
Earnings per share from continuing operations, basic	$	0.18		$	0.14			33.6	%	$	0.56		$	0.38			49.4	%
Earnings per share from continuing operations, diluted	$	0.17		$	0.13			30.9	%	$	0.53		$	0.38			40.3	%
(1) See Supplemental Financial Disclosure—Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures.
	Three Months Ended June 30,									Nine Months Ended June 30,
	2005			2004			% Change			2005			2004			% Change
Selected Operating Data (consolidated) (a):
Number of hospitals		11			11						11			11
Licensed beds (b)		672			672						672			672
Staffed and available beds (c)		631			601						631			601
Admissions (d)		11,345			10,774			5.3	%		33,947			30,985			9.6	%
Adjusted admissions (e)		14,963			13,713			9.1	%		44,851			39,188			14.5	%
Patient days (f)		39,232			36,460			7.6	%		118,893			108,119			10.0	%
Adjusted patient days (g)		51,443			46,255			11.2	%		156,264			136,451			14.5	%
Average length of stay (days) (h)		3.46			3.38			2.4	%		3.50			3.49			0.3	%
Occupancy (i)		68.3	%		66.7	%					69.0	%		65.7	%
Inpatient catheterization procedures		6,028			5,764			4.6	%		17,727			15,871			11.7	%
Inpatient surgical procedures		3,104			2,758			12.5	%		9,030			7,768			16.2	%
Hospital division revenue	$	181,068		$	162,573			11.4	%	$	530,541		$	457,521			16.0	%
	Three Months Ended June 30,									Nine Months Ended June 30,
	2005			2004			% Change			2005			2004			% Change
Selected Operating Data (same facility) (a):
Number of hospitals		11			11						9			9
Licensed beds (b)		672			672						580			580
Staffed and available beds (c)		631			601						547			531
Admissions (d)		11,345			10,774			5.3	%		30,414			29,797			2.1	%
Adjusted admissions (e)		14,963			13,713			9.1	%		40,749			37,804			7.8	%
Patient days (f)		39,232			36,460			7.6	%		106,099			104,247			1.8	%
Adjusted patient days (g)		51,443			46,255			11.2	%		141,431			131,945			7.2	%
Average length of stay (days) (h)		3.46			3.38			2.4	%		3.49			3.50			(0.3	)%
Occupancy (i)		68.3	%		66.7	%					71.0	%		71.7	%
Inpatient catheterization procedures		6,028			5,764			4.6	%		15,259			14,992			1.8	%
Inpatient surgical procedures		3,104			2,758			12.5	%		8,171			7,489			9.1	%
Hospital division revenue	$	181,068		$	162,573			11.4	%	$	469,272		$	436,131			7.6	%

(a)	Selected operating data includes consolidated hospitals 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 nine months ended June 30, 2005 excludes the results of Texsan Heart Hospital and Heart Hospital of Lafayette.
(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 hospitals.
(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 and nine months ended June 30, 2005 and 2004.

	Three Months Ended June 30,						Nine Months Ended June 30,
	2005			2004			2005			2004
				(in thousands)
Income from continuing operations	$	3,358		$	2,454		$	10,228		$	6,933
Add:
Income tax expense		2,528			1,169			7,107			3,978
Minority interest share of earnings of consolidated subsidiaries		3,956			2,852			12,357			3,878
Equity in net earnings of unconsolidated affiliates		(899	)		(900	)		(2,554	)		(2,624	)
Interest and other income, net		(887	)		(218	)		(1,903	)		(614	)
Interest expense		8,454			6,863			24,227			19,925
Loss (gain) on disposal of property, equipment and other assets		171			24			245			(27	)
Amortization		290			290			870			870
Depreciation		9,517			10,921			28,684			31,074
Adjusted EBITDA	$	26,488		$	23,455		$	79,261		$	63,393