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): February 21, 2006

MEDCATH CORPORATION

(Exact name of registrant as specified in its charter)

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

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 1.01. Entry into a Material Definitive Agreement

Effective February 21, 2006, MedCath Corporation (“MedCath” or “the Company”) entered into an employment agreement with O. Edwin French, President and Chief Executive Officer. The agreement provides for an initial three-year term that is automatically renewed for successive one year terms unless either party provides notice of non-renewal at least 90 days prior to the end of the initial or any renewal term. Mr. French’s initial annual base salary under the agreement is $550,000. His base salary will be adjusted annually at the discretion of the board of directors, but in no event may his base salary be reduced nor be less than the median base salary for a comparable position at corporations of similar size and character as the Company.

The agreement provides that Mr. French will participate in an annual bonus plan that will establish a target annual opportunity equal to 50% of his base salary for the year. The terms and provisions of the bonus plan, including the performance goals, the threshold performance levels that must be met for payment of a bonus, and the maximum bonus opportunity will be established each year by the compensation committee. The agreement further provides for him to participate in any other compensation plan or program maintained by the Company for senior executives as well as all employee fringe benefit, pension and welfare benefit programs which the Company makes available to senior executives.

Upon the termination of employment of Mr. French by the Company without cause (other than as a result of disability which is addressed below), or upon a voluntary termination by him for good reason, the agreement provides for the following payments and benefits:

• for an amount equal to the sum of two times his annual base salary and one times his target annual bonus following termination;

• earned but unpaid salary (including any awarded but unpaid bonus);

• any accrued but unpaid vacation;

• unreimbursed business expenses; and

• continued coverage under the Company’s medical plan for a period ending on the earlier of (A) the second anniversary of the date of termination or (B) the date Mr. French becomes covered under a comparable plan of a new employer.

Upon termination by the Company with cause, or by Mr. French without good reason, the agreement provides for the following payments:

• earned but unpaid salary (including any awarded but unpaid bonus);

• any accrued but unpaid vacation; and

• unreimbursed business expenses.

Upon termination of employment because of a total and permanent disability, Mr. French will receive any amounts due under the terms of any disability insurance policy which the Company maintains for him, a pro rata portion of the bonus (if any) for the fiscal year in which the disability occurs, any earned but unpaid salary (including any awarded but deferred bonus payment), any accrued but unpaid vacation, any unreimbursed business expenses and any amounts to which he is entitled under any applicable compensation or employee benefit program in which he participates.

Upon termination of employment because of death, Mr. French’s estate or designated beneficiaries will receive any death benefits provided under any plans the Company maintains for him, a pro rata portion of the bonus (if any) for the fiscal year in which the death occurs, any earned but unpaid salary (including any awarded but deferred bonus payment), any accrued but unpaid vacation, any unreimbursed business expenses and any amounts to which he is entitled under any applicable compensation or employee benefit program in which he participates.

The agreement contains non-competition and non-disclosure provisions. The non-disclosure provisions provide that Mr. French will not disclose confidential information regarding the Company and its subsidiaries and affiliates at any time during employment with the Company and following his termination of employment. The non-competition provisions provide that he will not, for a period of one year following the date of termination, compete with the Company by directly or indirectly becoming involved with a competitor of the Company. Furthermore, Mr. French agrees not to solicit employees of the Company for one year following the date of his termination of employment.

Item 1.02 Termination of a Material Definitive Agreement

On February 21, 2006, the Amended and Restated Employment Agreement dated September 30, 2005 by and between MedCath Corporation and John T. Casey was terminated as Mr. Casey retired as the Company’s Chief Executive Officer. He will continue to serve as the Chairman of the Board of the Company. There were no material circumstances or penalties associated with the termination of the agreement.

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

On February 21, 2006, MedCath announced that O. Edwin French was appointed President and Chief Executive Officer of the Company. Mr. French has served as MedCath’s Interim Chief Operating Officer since October 2005. MedCath’s former Chief Executive Officer, John T. Casey, will continue to serve as Chairman of the Board.

Prior to joining MedCath, Mr. French served as president of the Acute Care Hospital Division of Universal Health Services, Inc. until his early retirement in 2005. Since then, he has served as president of French Healthcare Consulting, Inc., a consulting firm specializing in operations improvement and joint ventures. He also served as president and chief operating officer of Physician Reliance Network from 1997 to 2000, as senior vice president for healthcare companies of American Medical from 1992 to 1995, as executive vice president of Samaritan Health Systems of Phoenix (Samaritan) from 1991 to 1992 and as senior vice president of Methodist Health Systems, Inc. (Methodist) in Memphis from 1985 to 1991. Both Samaritan and Methodist are large not-for-profit hospital systems. Mr. French received his undergraduate degree in occupational education from Southern Illinois University. He is 59 years old.

The discussion under Item 1.01 of this Current Report on Form 8-K is incorporated under this Item 5.02 as if set forth herein.

Item 9.01. Financial Statements and Exhibits

Exhibit 99.1 Press Release dated February 21, 2006

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: February 24, 2006	By:	/s/James E. Harris
		James E. Harris
		Executive Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

MEDCATH CONTACTS:

O. Edwin French James Harris	James Harris
President and Chief Executive Officer	Chief Financial Officer
(704) 708-6600	(704) 708-6600

O. Edwin French Named President and Chief Executive Officer

     Charlotte, N.C. Feb. 21, 2006 – MedCath Corporation (NASDAQ: MDTH), a national provider of cardiovascular care, announced today O. Edwin French has been elected President and Chief Executive Officer, effective immediately.

     “Since Ed joined us in October as interim Chief Operating Officer, he has immersed himself in our operations and provided immediate leadership to the Company,” said John T. Casey, who is retiring as MedCath’s CEO but will remain the Company’s employed chairman. “I personally asked Ed to become involved in MedCath, and I am confident that MedCath will be successful under his leadership.”

     French, 59, served as President, Acute Care Hospital Division for Universal Health Services, Inc. until shortly before joining MedCath. He also served as President of French Healthcare Consulting, Inc., a consulting practice specializing in operations improvement and healthcare joint ventures. Before joining Universal Health Services, French served as President and Chief Operating Officer of Physician Reliance Network from 1997 to 2000, as Senior Vice President of American Medical International from 1992 to 1995, as Executive Vice President of Samaritan Health Systems of Phoenix from 1991 to 1992 and as Senior Vice President of Methodist Health Systems, Inc. in Memphis from 1985 to 1991.

     “I am eager to take on the challenge of leading MedCath through its next stage of growth,” French said. “In my short time with the Company, I have been very impressed with the commitment of MedCath and its partners to patient-focused care. From that commitment, I will work to enhance our existing markets, and seek new partners and new markets to further our growth.”

     “I have had the benefit of knowing and working with John Casey for over 20 years,” French continued. “His contributions to the Company have been

significant, and I am delighted to be working with the MedCath team to further enhance what he has put in place.”

     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.

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     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, 2005. 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 legislation proposed to extend 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, 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.