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): November 15, 2006

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

The information contained herein is being furnished pursuant to Item 2.02 of Form 8-K, “Results of Operations and Financial Condition.” This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On November 15, 2006, MedCath Corporation (“MedCath” or the “Company”) issued a press release announcing the Company’s results of operations for the fiscal quarter and year ended September 30, 2006. A copy of the press release and financial update are furnished as Exhibits 99.1 and 99.2.

Included in the press release and the supplemental financial information issued by the Company and furnished herewith as Exhibits 99.1 and 99.2, are certain non-GAAP financial measures, including Adjusted EBITDA. Adjusted EBITDA represents MedCath’s income (loss) from continuing operations before interest expense; income tax expense; depreciation; amortization; non-cash share-based compensation expense; gain or loss on disposal of property, equipment and other assets; impairment of long-lived 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 analyses 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 (loss) from continuing operations.

Item 9.01. Financial Statements and Exhibits

Exhibit 99.1 Press Release dated November 15, 2006

Exhibit 99.2 Financial Update dated November 15, 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: November 16, 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 E. Harris
President and Chief Executive Officer	Chief Financial Officer
(704) 708-6600	(704) 708-6600

MEDCATH CORPORATION REPORTS FOURTH QUARTER AND FISCAL
2006 RESULTS

      CHARLOTTE, N.C., Nov. 15, 2006 — MedCath Corporation (Nasdaq: MDTH), a healthcare provider focused primarily on the diagnosis and treatment of cardiovascular disease, today announced operating results for its fourth fiscal quarter and fiscal year ended September 30, 2006.

      Fourth quarter and fiscal year highlights:

• Net revenue increased 5.7% to $177.4 million during the fourth quarter, and increased 5.1% to $706.4 million during the fiscal year.

• Adjusted EBITDA for the fourth quarter totaled $25.7 million. Adjusted EBITDA for the fiscal year increased 2.8% to $96.9 million.

• Adjusted admissions increased 1.9% for the quarter and 4.3% for the fiscal year.

Fourth Quarter 2006 Results

      MedCath’s net revenue increased 5.7% to $177.4 million in the fourth quarter of fiscal 2006 from $167.9 million in the fourth quarter of fiscal 2005. Income from operations was $15.7 million in the fourth quarter of fiscal 2006, compared to income from operations of $10.2 million in the fourth quarter of fiscal 2005. Adjusted EBITDA increased 9.4% to $25.7 million from $23.5 million, and income from continuing operations was $4.5 million, or $0.23 per diluted share, in the fourth quarter of fiscal 2006, compared to loss from continuing operations of $(89,000), or $(0.00) per diluted share, in the fourth quarter of fiscal 2005.

      During fiscal 2006, MedCath sold one hospital and announced its intent to sell another hospital. As a result, both of these hospitals are now reflected as discontinued operations in the 2006 and 2005 results.

      MedCath’s fourth quarter 2006 results contain the following unusual items. Per share amounts reflect minority interest expense, where applicable, and income taxes:

• Reimbursement adjustments that had a $1.8 million favorable impact to net revenue and Adjusted EBITDA and a $910,000 favorable impact to income from continuing operations, or a net impact of $0.04 per diluted share.

• A $230,000, or a net impact of $0.01 per diluted share, unfavorable adjustment to Adjusted EBITDA and a $140,000 unfavorable adjustment to income from continuing operations as a result of a settlement related to prior period rebate expenses.

      In comparison, MedCath’s fourth quarter of fiscal 2005 financial results were impacted by certain items that collectively had a $1.1 million favorable impact to Adjusted EBITDA and a $2.1 million unfavorable impact to income from continuing operations, or a net impact of $0.12 per diluted share.

      Share-based compensation expense totaled $840,000 in the fourth quarter of 2006, compared to $1.5 million in the fourth quarter of 2005. Adjusted EBITDA disclosed above does not include this expense but the expense is included as a component of income from continuing operations.

Fiscal 2006 Results

      For the fiscal year, MedCath’s net revenue increased 5.1% to $706.4 million from $672.0 million in fiscal 2005. Income from operations was $47.5 million in fiscal year 2006, compared to income from operations of $54.7 million in fiscal 2005. Adjusted EBITDA increased 2.8% to $96.9 million from $94.2 million, and income from continuing operations was $6.7 million, or $0.34 per diluted share, in fiscal 2006, compared to income from continuing operations of $7.6 million, or $0.39 per diluted share, in fiscal 2005.

MedCath’s fiscal 2006 results contain the following unusual items. Per diluted share amounts reflect minority interest expense, where applicable, and income taxes:

• Reimbursement adjustments that had a $1.4 million unfavorable impact to net revenue and Adjusted EBITDA and a $700,000 unfavorable impact to income from continuing operations, or a net impact of $0.04 per diluted share.

• A $1.1 million, or net impact of $0.03 per diluted share, increase in other operating expense related to executive severance.

• A $230,000, or a net impact of $0.01 per diluted share, unfavorable adjustment to Adjusted EBITDA and a $140,000 unfavorable

	adjustment to income from continuing operations as a result of a settlement related to prior period rebate expenses.
•	A $450,000, or $0.01 per diluted share, expense related to the impairment of a workforce management system that the Company has decided to not implement.
•	A net $1.4 million, or $0.04 per diluted share, increase in other income related to the settlement of a legal dispute. This settlement is net of related legal expenses.
•	A $1.4 million, or net impact of $0.04 per diluted share, increase in interest expense related to the expensing of deferred loan acquisition costs associated with the prepayment of $11.9 million of senior notes and $58.0 of bank debt.

      In comparison, MedCath’s fiscal 2005 financial results were impacted by certain items that collectively had a $1.1 million favorable impact to Adjusted EBITDA and a $2.1 million unfavorable impact to income from continuing operations, or a net unfavorable impact of $0.10 per diluted share.

      Share-based compensation expense totaled $13.2 million in fiscal 2006, compared to $1.5 million in fiscal 2005. Adjusted EBITDA disclosed above does not include this expense but the expense is included as a component of income from continuing operations.

      “During this fiscal year, we put in place several operating initiatives that allowed us to exceed our net revenue, Adjusted EBITDA and income from continuing operations targets,” said Ed French, president and chief executive officer. “We have also identified other areas that should provide us with opportunity to further expand market share and margins in 2007.”

Operating Statistics

      Hospital admissions for the fourth quarter of fiscal 2006 were flat compared to prior year and adjusted admissions rose 1.9% from the fourth quarter of the previous fiscal year. Same facility hospital division net revenue increased 6.3%, while same facility inpatient catheterization procedures decreased 5.7% and inpatient surgical procedures remained unchanged compared to last year.

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 (loss) from continuing operations before interest expense; interest and other income, net; income tax expense; depreciation; amortization; share-based compensation expense; gain or loss on disposal of property, equipment and other assets; impairment of long-lived assets; 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 that accompanies this press release that reconciles Adjusted EBITDA to MedCath’s income (loss) from continuing operations.

Earnings Conference Call and Web cast

      Management will discuss and answer questions regarding MedCath’s quarterly results Thursday November 16, 2006 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 webcast 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, Nov. 23, 2006. To access the replay, domestic callers should dial (800) 642-1687 and international callers should dial (706) 645-9291. The archived conference ID is 9786092. 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 primarily on the diagnosis and treatment of cardiovascular disease. MedCath focuses on serving the unique needs of patients suffering from cardiovascular disease. MedCath owns interests in and operates eleven hospitals with a total of 667 licensed beds, located in Arizona, Arkansas, California, Louisiana, New Mexico, Ohio, South Dakota, and Texas. In addition, MedCath manages the cardiovascular program at various hospitals operated by other parties. Further, MedCath provides cardiovascular care services in diagnostic and therapeutic facilities located 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. 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 “Risk Factors” in MedCath’s Amendment No. 1 to Form S-3 filed with the Securities and Exchange Commission on October 26, 2006. A copy of this report is available on the internet site of the Securities and Exchange Commission at http://www.sec.gov .

EX-99.2

Exhibit 99.2

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

	Three Months Ended September 30,						Twelve Months Ended September 30,
	2006			2005			2006			2005
Net revenue	$	177,444		$	167,881		$	706,374		$	672,001
Operating expenses:
Personnel expense		55,472			52,603			228,350			205,469
Medical supplies expense		47,684			46,458			196,046			189,953
Bad debt expense		14,395			13,348			56,845			48,220
Other operating expenses		35,008			33,426			141,498			135,618
Depreciation		8,863			9,766			34,792			34,862
Amortization		252			290			1,008			1,160
(Gain) loss on disposal of property, equipment and other assets		95			(824	)		(142	)		(646	)
Impairment of long-lived assets		7			2,662			458			2,662
Total operating expenses		161,776			157,729			658,855			617,298
Income from operations		15,668			10,152			47,519			54,703
Other income (expenses):
Interest expense		(7,952	)		(8,324	)		(33,210	)		(31,832	)
Interest and other income, net		2,029			1,167			7,733			3,018
Equity in net earnings of unconsolidated affiliates		1,036			802			4,919			3,356
Total other expenses, net		(4,887	)		(6,355	)		(20,558	)		(25,458	)
Income from continuing operations before minority interest, income taxes and discontinued operations		10,781			3,797			26,961			29,245
Minority interest share of earnings of consolidated subsidiaries		(3,171	)		(3,611	)		(15,521	)		(15,968	)
Income from continuing operations before income taxes and discontinued operations		7,610			186			11,440			13,277
Income tax expense		3,120			275			4,729			5,643
Income (loss) from continuing operations		4,490			(89	)		6,711			7,634
Income (loss) from discontinued operations, net of taxes		6,449			(2,212	)		5,865			1,157
Net income (loss)	$	10,939		$	(2,301	)	$	12,576		$	8,791
Earnings (loss) per share, basic
Continuing operations	$	0.24		$	—		$	0.36		$	0.42
Discontinued operations		0.34			(0.12	)		0.31			0.06
Earnings (loss) per share, basic	$	0.58		$	(0.12	)	$	0.67		$	0.48
Earnings (loss) per share, diluted
Continuing operations	$	0.23		$	—		$	0.34		$	0.39
Discontinued operations		0.32			(0.12	)		0.30			0.06
Earnings (loss) per share, diluted	$	0.55		$	(0.12	)	$	0.64		$	0.45
Weighted average number of shares, basic		18,872			18,493			18,656			18,286
Dilutive effect of stock options and restricted stock		1,037			—			899			1,184
Weighted average number of shares, diluted		19,909			18,493			19,555			19,470

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

	Three Months Ended September 30,								Twelve Months Ended September 30,
	2006		2005			% Change			2006		2005		% Change
Statement of Operations Data:
Net revenue	$	177,444	$	167,881			5.7	%	$	706,374	$	672,001		5.1	%
Adjusted EBITDA (1)	$	25,727	$	23,514			9.4	%	$	96,857	$	94,209		2.8	%
Income from operations	$	15,668	$	10,152			54.3	%	$	47,519	$	54,703		(13.1	)%
Income (loss) from continuing operations	$	4,490	$	(89	)		5144.9	%	$	6,711	$	7,634		(12.1	)%
Earnings per share from continuing operations, basic	$	0.24	$	—			100.0	%	$	0.36	$	0.42		(14.3	)%
Earnings per share from continuing operations, diluted	$	0.23	$	—			100.0	%	$	0.34	$	0.39		(12.8	)%

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

	Three Months Ended September 30,									Twelve Months Ended September 30,
	2006			2005			% Change			2006			2005			% Change
Selected Operating Data (consolidated) (a):
Number of hospitals		9			9						9			9
Licensed beds (b)		580			580						580			580
Staffed and available beds (c)		563			546						563			546
Admissions (d)		9,991			10,021			(0.3	)%		41,406			39,876			3.8	%
Adjusted admissions (e)		13,356			13,102			1.9	%		54,186			51,942			4.3	%
Patient days (f)		32,258			33,598			(4.0	)%		136,532			139,115			(1.9	)%
Adjusted patient days (g)		43,018			43,614			(1.4	)%		178,667			180,248			(0.9	)%
Average length of stay (days) (h)		3.23			3.35			(3.6	)%		3.30			3.49			(5.4	)%
Occupancy (i)		62.3	%		66.9	%					66.4	%		69.8	%
Inpatient catheterization procedures		5,032			5,335			(5.7	)%		21,163			20,760			1.9	%
Inpatient surgical procedures		2,671			2,680			(0.3	)%		10,911			10,815			0.9	%
Hospital net revenue	$	163,867		$	154,122			6.3	%	$	648,898		$	615,991			5.3	%

(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.
(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 GAAP FINANCIAL MEASURES
TO NON-GAAP FINANCIAL MEASURES
(Unaudited)

      The following table reconciles Adjusted EBITDA with MedCath’s income (loss) from continuing operations as derived directly from MedCath’s consolidated financial statements for the three and twelve months ended September 30, 2006 and 2005.

	Three Months Ended September 30,						Twelve Months Ended September 30,
	2006			2005			2006			2005
				(in thousands)
Income (loss) from continuing operations	$	4,490		$	(89	)	$	6,711		$	7,634
Add:
Income tax expense		3,120			275			4,729			5,643
Minority interest share of earnings of consolidated subsidiaries		3,171			3,611			15,521			15,968
Equity in net earnings of unconsolidated affiliates		(1,036	)		(802	)		(4,919	)		(3,356	)
Interest and other income, net		(2,029	)		(1,167	)		(7,733	)		(3,018	)
Interest expense		7,952			8,324			33,210			31,832
Impairment of long-lived assets		7			2,662			458			2,662
(Gain) loss on disposal of property, equipment and other assets		95			(824	)		(142	)		(646	)
Amortization		252			290			1,008			1,160
Depreciation		8,863			9,766			34,792			34,862
Share-based compensation expense		842			1,468			13,222			1,468
Adjusted EBITDA	$	25,727		$	23,514		$	96,857		$	94,209